When NATO signaled that member states should lift defense-spending targets from 2% to as high as 5% of GDP, it did more than adjust a budget guideline, it set off what may become the most significant global rearmament cycle in decades. [1]

Such a massive increase in budget, including 3.5% for core military capabilities and up to 1.5% for defense- and security-related infrastructure, innovation, and industrial base spending, carries enormous implications for global procurement. [1] For investors, this shift is more than a headline. It represents a multi-trillion-dollar structural trend reshaping defense procurement, global supply chains, and long-term capital flows.

And in one of the most unexpected but compelling developments in geopolitics-meets-markets, a new critical supplier is emerging: South Korea.

A Global Defense Supercycle Takes Shape

Europe’s strategic reality has changed faster than its industrial capacity. Even nations meeting the original 2% defense-spending standard now face urgent shortfalls: depleted stockpiles, outdated equipment, and multi-year backlogs from traditional U.S. and European suppliers. As countries scramble to modernize and replenish, timelines matter as much as technology. [2]

This creates a strategic opening for South Korea. Over the past few years, South Korea has quietly transformed into a global arms exporter with increasing relevance. [3]

Why Korea Is Becoming the Arsenal for a New Era

South Korea has spent decades building one of the world’s most advanced, efficient, and vertically integrated defense manufacturing ecosystems. Today, Korean firms can deliver tanks, howitzers, armored vehicles, missiles, and aerospace platforms faster, cheaper, and with cutting-edge technology. [3]

European nations have taken notice. Poland’s landmark multi-billion-dollar procurement deals signaled a turning point, and other countries are now exploring or finalizing contracts with Korean manufacturers. What began as a stop-gap solution is now evolving into long-term strategic reliance. [3]

South Korea is no longer just an exporter; it seeks to become a foundational pillar in the global defense supply chain.

A Market Story Hiding in Plain Sight

For investors and advisors, this moment represents a rare convergence:

• Geopolitical urgency is driving a generational increase in defense spending.
• Structural supply constraints are redirecting billions toward faster, more adaptable suppliers.
• Korea’s defense sector is positioned as a primary beneficiary and its runway is measured in decades, not quarters.

KDEF: A Direct Line to Korea’s Defense Renaissance

The Plus Korea Defense Industry Index is designed and run by a Korean company to potentially give investors precise, targeted exposure to this accelerating global shift. By offering a basket of publicly traded Korean defense-industry companies, KDEF aims to provide a clear, investable entry point into this secular trend and access to the ecosystem of Korean defense innovators positioned at the center of the world’s new security spending cycle.

Geopolitics Is Shifting. Portfolios Can Too.

Advisors and investors seeking long-term structural themes often face a crowded field of short-lived narratives. But the defense spending surge is not a passing trend, it is a recalibration of global priorities. With NATO countries rewriting their budgets, procurement pipelines reshuffling, and Korea stepping forward as a reliable, technologically advanced supplier, the landscape of defense investment has changed.

KDEF stands at the intersection of these forces, transforming a global security transformation into a clear, potentially compelling investment opportunity.

Pure-Play Access to Korea’s Defense Engine.

Take a closer look at the companies shaping this theme: view KDEF’s holdings here. Holdings subject to change.

[1] Ruitenberg, Rudy, NATO allies agree to boost defense spending to 5% at The Hague Summit, Defense News, 6/25/25.

[2] Scaramello, Roberto et al, Key Challenges Facing Europe’s Proposed Defense Expansion, Oliver Wyman.

[3] Lee, Joyce and Smith, Josh, Insight: Inside South Korea’s race to become one of the world’s biggest arms dealer, Reuters, 5/29/23.