When most investors hear "defense ETF," they picture howitzers, helmets, and legacy contractors.

What they probably don't picture is a domestically built 4.5-generation fighter jet rolling off an assembly line, a $1.1 billion electronic warfare aircraft contract awarded to a tech-forward defense company, or a satellite manufacturer founded by the engineers who built Korea's first satellite, imaging the Earth at 25-centimeter resolution for military intelligence customers. But that's exactly what's happening inside South Korea's defense sector right now and it's what the Plus Korea Defense Industry Index ETF (KDEF) seeks to offer access to.

KDEF tracks the Korea Defense Industry Index, a passively managed collection of South Korean companies with high relevance to defense.¹ Its top holdings - Hanwha Aerospace, Hyundai Rotem, Korea Aerospace Industries (KAI), LIG Defense & Aerospace, and Hanwha Systems, among others - read less like a roster of Cold War manufacturers and more like a who's who of next-generation military technology.² KDEF is defense and technology. Two disciplines that, inside Korea's military industrial complex, have become inseparable

The KF-21 Boramae: Korea's Fighter Jet Moment

The clearest proof point is the KF-21 Boramae. In 2026, Korea Aerospace Industries began delivering the first production units of South Korea's first indigenously developed supersonic fighter aircraft to the Republic of Korea Air Force - a milestone that took more than a decade to reach.³ The KF-21 is a 4.5-generation multirole fighter featuring a stealth-shaped airframe, fly-by-wire controls, twin General Electric F414 engines, and an active electronically scanned array (AESA) radar developed domestically by Hanwha Systems in cooperation with South Korea's Agency for Defense Development.⁴

At roughly $83 million per Block I aircraft, the KF-21 positions South Korea among a very small group of nations capable of designing and producing advanced fighter jets from the ground up.⁵ The Republic of Korea Air Force plans to acquire at least 120 units by the early 2030s,⁶ and international export interest is growing. The KF-21 program is simultaneously Korea's most ambitious aerospace achievement and its most compelling technology independence story, and KAI is one of KDEF's top holdings. (as of 4/30/26)

LIG Defense & Aerospace’s $1.1 Billion Electronic Warfare Play

If the KF-21 is the headline, LIG Defense & Aerospace's electronic warfare aircraft contract is the deeper tech story flying under the radar. In December 2025, South Korea's Defense Acquisition Program Administration (DAPA) awarded them a contract valued at approximately 1.56 trillion won (roughly $1.1 billion) to develop South Korea's first dedicated stand-off electronic warfare aircraft, working alongside Korean Air.⁷ The program will adapt a Bombardier Global 6500 business jet into a specialized platform designed to jam enemy radar networks and disrupt command systems while operating outside hostile airspace, with a planned fielding date of June 2034.⁸

This is sophisticated electronic warfare engineering: detecting and analyzing enemy signals, suppressing integrated air defenses, and degrading adversary communications in wartime.⁹ The fact that South Korea is now developing this capability indigenously, reflects a deliberate national strategy toward technological self-reliance. LIG Defense & Aerospace is a top holding in KDEF.² (as of 4/30/26)

DAPA's Innovation Ecosystem: AI, Robotics, Space, and Chips

The innovation pipeline isn't limited to the big contractors. South Korea's Defense Acquisition Program Administration has built a national infrastructure to cultivate next-generation defense technology from the ground up. The Defense Innovation Cluster program, which began in Changwon in 2020, now spans three sites and is targeting expansion to six regions by 2026, with each cluster focused on five strategic sectors: defense semiconductors, artificial intelligence, robotics, space, and advanced materials.¹⁰ Selected sites receive central government funding of 24.5 billion won over five years, and KDEF holdings (as of 4/30/26) including Hanwha Aerospace, Hyundai Rotem, LIG Defense & Aerospace, and KAI have signed formal agreements to participate.¹⁰

Meanwhile, DAPA's "Defense Innovation Company 100" program designates and nurtures small-to-medium enterprises and startups with innovative technologies across those same five sectors.¹¹ In 2025, 21 companies were selected for the program. This pipeline of defense startups is developing the next generation of drone and autonomous weapons systems that the major contractors will eventually integrate and scale.

DAPA has also made defense semiconductor independence a formal priority. Projects initiated in late 2024, covering space semiconductors for small satellite communications, tactical-grade gyro sensors, chips for unmanned aerial vehicle synthetic aperture radar, and chips for AESA radars, are now actively underway, all aimed at reducing reliance on foreign supply chains for components that sit at the core of modern weapons systems.¹²

Satrec Initiative and the Space-Based Intelligence Edge

One of KDEF's most compelling - and least visible to Western investors- holdings is Satrec Initiative, South Korea's premier satellite manufacturer and a company that sits squarely at the intersection of space technology and military intelligence. Founded in 1999 by the very engineers who built South Korea's first satellite at KAIST's Satellite Technology Research Center, Satrec has spent 25 years developing end-to-end satellite systems, designing and manufacturing its core components entirely in-house rather than relying on off-the-shelf parts.¹³ 

Satrec Initiative occupies a central role in South Korea's national defense architecture. It was one of only three private companies formally recognized by South Korea's Ministry of National Defense for its contributions to the 425 Project, a 1.3 trillion won program deploying five military reconnaissance satellites - one equipped with electro-optical/infrared sensors and four with synthetic aperture radar - to provide South Korea with independent, persistent surveillance of the Korean Peninsula.¹⁴ In modern warfare, this kind of persistent orbital intelligence is the prerequisite for everything else: targeting data, battle damage assessment, missile tracking, and real-time situational awareness.

On the commercial side, Satrec launched its SpaceEye-T satellite aboard a SpaceX Falcon 9 rideshare mission in March 2025. This is a 700-kilogram platform capable of imaging the Earth's surface at 25-centimeter resolution from approximately 510 kilometers altitude.¹⁵ Within months of launch, Satrec's imaging services affiliate signed a multi-year, multi-million-euro contract with a European customer for dedicated satellite tasking capacity under a Satellite-as-a-Service model.¹⁵ SpaceEye-T is the first satellite in what Satrec envisions as a privately owned constellation, and it serves both civilian and military customers. Hanwha Aerospace holds a roughly 30% stake in Satrec Initiative, further tightening the integration across the fund's portfolio.¹³

The Investor Case: Accessing Korean Tech Through a Defense Lens

For U.S. investors and advisors, KDEF offers a single-ticker vehicle to access a cluster of Korean technology and aerospace companies that, absent a defense-sector lens, would be nearly invisible to most domestic portfolios. The KF-21 fighter, LIG Defense & Aerospace’s electronic warfare aircraft, DAPA's innovation clusters, and Satrec Initiative's orbital reconnaissance capabilities aren't just defense capabilities in the traditional sense, they are technological infrastructure for the next era of warfare, built by companies with rapidly expanding order books and government-backed mandates to develop them indigenously.
Whether you frame it as a defense ETF or a technology ETF probably depends less on the label and more on what you believe the future of warfare and the companies building it looks like.

To view KDEF’s holdings click here >>. Holdings subject to change.

Sources:
1.AAII. "PLUS Korea Defense Industry Index ETF (KDEF)." Accessed April 2026.  
2. Stock Analysis. "KDEF Holdings List – PLUS Korea Defense Industry Index ETF." Accessed April 2026.  
3. Army Recognition. "South Korea to Deliver First Locally Developed KF-21 Boramae Fighter Jets to Its Air Force in 2026." January 4, 2026.  
4. Aerospace Global News. "South Korea's KF-21 Boramae Fighter Set to Enter Service in 2026." January 5, 2026.  
5. Aerotime. "South Korea to Deliver First KF-21 Boramae Fighters in 2026." January 4, 2026.
6. Aeronews Journal. "South Korea Delivers First KF-21 Boramae Fighter Jets to Air Force in 2026." January 3, 2026.  
7. The Defense Post. "LIG Nex1 to Build South Korea's First Stand-Off Electronic Warfare Aircraft." January 2, 2026.  
8. The Aviationist. "South Korea's EW Aircraft Moves Forward with $1.29 Billion Funding." January 23, 2026.  
9. Defence Industry Europe. "South Korea Awards LIG Nex1 and Korean Air Contract to Develop First Domestic Electronic Warfare Aircraft." January 4, 2026
10. Seoul Economic Daily. "Local Governments Compete to Host Defense Innovation Clusters." March 31, 2026.  
11. Seoul Economic Daily. "Daejeon Mayor Meets Defense Innovation Companies After Record Selection." January 8, 2026.  
12. UPI/Asia Today. "South Pushes Defense Semiconductors to Cut Reliance on Foreign Supply." December 25, 2025.  
13. Hanwha. "SpaceEye-T Delivers Ultra-Clear Satellite Imagery." April 18, 2025.  
14. Global Security. "Successful Completion of the Military Reconnaissance Satellite 425 Project Marks a Key Pillar of Independent Defense." November 28, 2025.  
15. eoPortal. "SpaceEye-T." Updated February 21, 2026.