The Korea Defense Industry Index

The Korea Defense Industry Index is designed to provide focused long exposure to South Korean companies that demonstrate high relevance to the defense industry, specifically targeting stocks listed on the KOSPI and KOSDAQ exchanges. The index employs a sophisticated dual-scoring methodology using Large Language Model (LLM) technology to evaluate companies, first applying an absolute thematic relevance score to identify qualified candidates (score ≥ 0.5), then using a relative scoring system to select the top 50% performers among the qualified companies. The final index weighting combines market capitalization (70% weight) and thematic relevance scores (30% weight), with individual constituent weights capped at 20% and subject to additional optimization constraints to ensure proper diversification and investability. The index undergoes quarterly rebalancing and features robust governance through the Akros Index Committee, which validates company relevance through revenue analysis to maintain the index's integrity and alignment with the defense sector.