Exclusive: Hyundai Rotem draws $173m in passive capital from ETF inclusion

Hyundai Rotem has been added to the portfolio of the VanEck Defense UCITS ETF, a global defense-focused exchange-traded fund managing $5.9 billion in assets. This marks the first time the South Korean defense company has been included in any of the seven actively managed global defense ETFs.

According to a second-quarter review and rebalancing report obtained by ChosunBiz on June 20, MarketVector Indexes—an indexing subsidiary of U.S. asset manager VanEck—selected Hyundai Rotem as a new constituent in the fund. The ETF, which tracks the MarketVector Global Defense Industry Index, is listed on stock exchanges across 17 European countries, including the United Kingdom, Germany and France.

The K2 battle tank undergoes a live-fire test in Poland. /Courtesy of Hyundai Rotem

Hyundai Rotem has been assigned a 2.94 percent weighting in the ETF. Germany’s RENK Group and the United Kingdom’s Chemring Group were also newly added. The ETF is scheduled to incorporate these stocks into its holdings after the close of major European markets later in the day.

The addition is expected to draw approximately $173.46 million (239.5 billion won) in passive capital into Hyundai Rotem. These funds, which track benchmark indices, are managed with long-term investment strategies. As the VanEck Defense UCITS ETF undergoes quarterly rebalancing, Hyundai Rotem’s weighting in the fund may change going forward.

Industry analysts say the move significantly raises Hyundai Rotem’s profile as a global defense contractor. The company is expected to finalize a $6 billion contract with the Polish government by the end of this month to supply 180 K2 Black Panther tanks and is currently in talks with at least nine other countries regarding further exports.

To meet rising demand, Hyundai Rotem plans to invest 630 billion won to double its annual K2 production capacity to over 200 units.

The VanEck Defense UCITS ETF holds shares in 28 global defense companies, including U.S.-based Palantir Technologies and RTX Corporation, Germany’s Leonardo, and France’s Thales Group. South Korea’s Hanwha Aerospace and Korea Aerospace Industries (KAI) are also among the fund’s existing constituents.

“Inclusion in a global ETF signals growing attention from investors,” a defense industry official said. “It also increases the likelihood that Hyundai Rotem will be added to other international defense funds in the future.”