EWY vs FLKR: The Best Korea ETF for U.S. Investors in 2026
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The KDEF ETF is the answer to a question many U.S. investors had after last week’s article. We walked through Korea’s “Big 4” defense companies — Hanwha Aerospace, Hyundai Rotem, KAI, and LIG Nex1 — and the $69 billion order backlog driving the K-Defense story. The question that came back from several readers was simple: I’m convinced. How do I actually buy these from a U.S. brokerage account?
For most U.S. investors, the answer is one ticker: KDEF.
Launched on NYSE Arca in February 2025, the PLUS Korea Defense Industry Index ETF is the first U.S.-listed fund dedicated entirely to Korean defense. It’s small but growing fast — assets under management have climbed from roughly $47 million in August 2025 to over $164 million by March 2026. The one-year return as of early 2026: +142.7%, more than three times the industrial-sector category average. Let’s break it down.
KDEF ETF at a glance
| Field | Detail |
|---|---|
| Ticker | KDEF (NYSE Arca) |
| Full name | PLUS Korea Defense Industry Index ETF |
| Inception | February 4, 2025 |
| Issuer | Exchange Traded Concepts + Hanwha Asset Management |
| Expense ratio | 0.65% |
| Holdings | ~25 stocks (Top 10 = 68.7% of assets) |
| AUM | $164.6 million (March 2026) |
| Index tracked | Korea Defense Industry Index |
| Dividend yield | ~1.2% (trailing 12-month) |
The fund is structured as a non-diversified, concentrated bet on the Korean defense sector. Minimum market cap for index inclusion is 300 billion KRW (about $206 million). No single holding can exceed 20% of the index. Sector exposure is 82% industrials, with smaller weightings in technology, consumer cyclical, and healthcare names tied to defense supply chains. Geographic exposure: 100% Korea.
What’s actually inside the KDEF ETF
Here are the top 10 holdings as of early 2026, which together account for roughly two-thirds of the fund’s assets.
| Rank | Company | Weight | Focus |
|---|---|---|---|
| 1 | Hanwha Aerospace | 15.5% | K9 howitzers, Chunmoo MRLS, engines |
| 2 | Hyundai Rotem | 12.3% | K2 Black Panther tanks |
| 3 | Korea Aerospace Industries (KAI) | 10.0% | FA-50, KF-21 Boramae |
| 4 | Snt Dynamics | 7.2% | Defense components, transmissions |
| 5 | Hanwha Systems | 4.8% | Defense electronics, radar systems |
| 6 | LIG Nex1 | 4.6% | Cheongung II missiles, guided weapons |
| 7 | MNC Solution | 3.8% | Defense IT, training systems |
| 8 | LIG Defense & Aerospace | 3.6% | Aerospace structures |
| 9 | Poongsan | 3.5% | Ammunition, brass components |
| 10 | SNT Motiv | 3.5% | Small arms, defense vehicles |
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The Big 4 inside KDEF
The four “headline” K-Defense names — Hanwha, Hyundai Rotem, KAI, LIG Nex1 — together make up about 42.4% of KDEF. Buying one ticker gives you concentrated exposure to those plus the broader Korean defense supply chain.
Notably, the fund extends beyond the “Big 4” headline names into smaller specialized players — ammunition (Poongsan), electronics (Hanwha Systems), components (Snt Dynamics) — that don’t get individual coverage in mainstream financial media but benefit from the same export tailwinds. That’s a real benefit if you want sector exposure rather than just stock-picking the obvious names.
Performance and costs
KDEF’s short history has been dramatic. Since its February 2025 launch, the fund has delivered some of the strongest sector ETF returns globally.
- 1-year return: +142.7% (category average: +44.4%)
- Year-to-date 2026: +41.9% (category: +14.0%)
- 3-month: +29.8%
- 52-week range: $23.22 — $67.41
These returns reflect the broader K-Defense thesis we discussed last week — the Poland deal aftermath, Romania production buildout, $69 billion order backlog converting to revenue. KDEF has been a clean way to capture that.
On costs, the 0.65% expense ratio is competitive for a specialized country-sector ETF. For comparison, broader Korea ETFs come in cheaper — EWY at 0.59%, FLKR at 0.09% — but those funds spread exposure across all Korean equities, with defense as a small slice. KDEF is paying for concentration.
KDEF vs alternatives — which one when?
U.S. investors looking at Korean defense have three realistic paths. Each makes sense for a different goal.
| Option | What you get | Cost | Best for |
|---|---|---|---|
| KDEF | ~25 Korean defense stocks, concentrated | 0.65% ER | Pure K-Defense exposure in one ticker |
| EWY / FLKR | ~90-120 broad Korean equities | 0.59% / 0.09% ER | Diversified Korea exposure; defense is a small slice |
| Direct KRX | Specific stocks (Hanwha, KAI, etc.) | FX + brokerage fees | High-conviction single-name plays |
For most readers we hear from, KDEF is the right answer. It removes three friction points that make direct KRX access annoying for U.S. retail investors: currency conversion, foreign tax administration, and Korean market hours. You buy it in dollars during U.S. trading hours, the fund handles everything else, and you get a 1099-DIV at year-end like any other U.S.-listed ETF.
For investors who already own EWY or FLKR (we compared them in our EWY vs FLKR guide), KDEF is complementary rather than substitute — it concentrates exposure to a sector your broad Korea ETF already touches lightly.
For high-conviction investors who want pure exposure to a single name like Hanwha Aerospace, direct KRX access via Interactive Brokers remains the cleanest route. We walked through the full process in how to buy Korean stocks from the U.S.
Who should buy KDEF?
KDEF is a focused sector bet. It makes most sense when three things are true:
- You believe the K-Defense export thesis (Poland, Romania, ongoing European rearmament) is structural, not a temporary surge.
- You want diversified exposure within that thesis — not just Hanwha, not just one company, but the whole Korean defense supply chain including smaller specialized names.
- You’re comfortable with sector concentration. KDEF is non-diversified by design. If Korean defense underperforms, KDEF will underperform — there’s no offsetting broad-market exposure.
Position sizing matters here. Most asset allocators wouldn’t put 20% of a portfolio in a single-country sector ETF. A 2-5% position as part of a broader Korea or thematic defense allocation is the typical use case.
Risks worth flagging
Three risks deserve real attention before buying KDEF.
Concentration risk. Top 10 holdings = 68.7% of assets. Top 3 alone = 37.8%. If Hanwha Aerospace or Hyundai Rotem stumble on a delivery or contract renegotiation, KDEF feels it immediately.
Valuation risk. The +142% one-year return is spectacular but also raises the bar for what’s already priced in. Korean defense valuations have re-rated meaningfully since 2023. The structural story remains intact, but the easy money has been made.
Geopolitical and currency risk. KDEF’s KRW exposure is hedged at the fund level only for some currency movements. Russia-Ukraine de-escalation, U.S.-China policy shifts, or domestic Korean political events (which have rattled markets before) can all affect returns in ways unrelated to fundamental performance.
Liquidity. KDEF trades around 113,000 shares average daily volume. That’s manageable for most retail orders but the bid-ask spread is wider than mega-cap ETFs. Limit orders rather than market orders are recommended.
The bottom line
KDEF is the cleanest U.S.-listed instrument for investors who agree with the Korean defense thesis but don’t want to deal with KRX direct access. It packages the Big 4 (Hanwha, Hyundai Rotem, KAI, LIG Nex1) plus the broader Korean defense supply chain into one ticker, at a 0.65% expense ratio. Performance since launch has been remarkable, but concentration and valuation risks have grown along with the rally.
For most readers asking “how do I buy K-Defense from my U.S. account,” this is the answer. Just position-size accordingly.
More on Korean defense and ETFs
Full breakdown of the K-Defense Big 4, EWY vs FLKR for broad Korea exposure, and how to access Korean stocks directly — all in one place.More ETFs →
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Always consult a licensed financial advisor before making investment decisions. The author does not hold positions in KDEF or any individual securities mentioned at the time of writing.