Korea Investment Management: "Time to Focus on European Defense Companies"

ACE Europe Defense Top 10 ETF Newly Listed Today

On September 23, Korea Investment Management held a defense fund seminar at the Korea Financial Investment Association in Yeouido. The seminar was organized to introduce Korea Investment Management's defense fund. Hyuntae Kim, Head of Global Quantitative Management, and Yongsoo Nam, Head of ETF Management Division, gave presentations.

Hyuntae Kim, the fund manager of the Korea Investment Global Space Technology & Defense Fund, which was first established in 2023, stated, "Not only is the advancement of artificial intelligence (AI) technology accelerating, but there is also a global trend of increasing defense spending, which is driving up demand for satellite data."

He further emphasized, "The Golden Dome Project announced by the United States in May clearly shows that the core of the project is a space-based missile defense system."

He also explained, "We are paying close attention to companies such as SpaceX and Rocket Lab, which have reduced space launch costs through the development of reusable launch vehicles; AST SpaceMobile, which succeeded in direct communication technology between satellites and mobile devices for the first time in the world; and Planet Labs, which operates the largest number of Earth observation satellites globally."

The Korea Investment Global Space Technology & Defense Fund is a product that invests in major global companies related to the space and defense industries. It selects portfolio stocks by utilizing data such as the space economy classification system published by the Organisation for Economic Co-operation and Development (OECD) and the National Aeronautics and Space Administration (NASA)'s list of space company partners.

Yongsoo Nam, Head of Division, introduced, "With ongoing security threats, the North Atlantic Treaty Organization (NATO) has agreed to increase defense spending to 5% of gross domestic product (GDP) by 2035."

He continued, "Given that NATO's defense spending last year was 660 trillion won, which was 2.2% of GDP, the defense budget for 2035 is projected to reach 1,543 trillion won, comparable to last year's electric vehicle market size."

Nam explained, "The European Union (EU) and NATO are emphasizing the 'Buy European' policy for weapons procurement as they increase defense spending," adding, "This suggests a structural and long-term growth outlook for European defense companies." He further stated, "This is why we need to focus on European defense companies with both growth potential and technological capabilities, and why we have introduced the ACE Europe Defense Top 10 ETF."

Nam leads the ETF Management Division at Korea Investment Management. Within this division, the ETF Management Department is responsible for managing the newly listed ACE Europe Defense Top 10 Exchange-Traded Fund (ETF) as of today. The ACE Europe Defense Top 10 ETF invests in the top 10 European-listed companies with the highest proportion of revenue from the defense industry. With the new ETF listing, the number of ACE ETFs listed on the Korea Exchange has increased to 100.

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