Investors shift to income strategies following Federal Budget

12 June 2026

• Australian equity ETFs recorded their strongest month with $2.3 billion in May
• High dividend yielding ETFs recorded their best month ever
• Australian income ETFs are outperforming the broader market

Global X ETFs has revealed a significant shift in Australian investor behaviour in May, with the latest ETF flow data showing record demand for income-generating strategies amid proposed changes to capital gains tax (CGT) in the Federal Budget.

With the prospect of higher taxes on capital gains, investors are increasingly prioritising after-tax outcomes, favouring investments that derive a larger proportion of returns from dividends and income rather than capital appreciation.

Australian share ETFs attracted a record $2.3 billion in net inflows in May, accounting for approximately 42% of all ETF flows - their highest share since August 2023.

At the same time, Australian yield-focused ETFs recorded their best month of inflows, drawing $243 million as investors sought more income-orientated and tax-efficient sources of return.

“Investor behaviour in May points to a clear pivot,” said Marc Jocum, Senior Product and Investment Strategist at Global X ETFs. “The proposed CGT reforms have sharpened the focus on after-tax returns, prompting many Australians to reassess how their portfolios generate performance. We’re seeing a growing preference for income-oriented strategies that may be better positioned under a higher capital gains tax regime,” he said.

“Despite a challenging domestic economic backdrop, investors appear increasingly comfortable investing locally,” Mr Jocum said. “Sticky inflation, rising unemployment and subdued growth haven’t deterred flows into Australian equities, suggesting a level of confidence in domestic markets and familiar sectors.”

Within Australian equities, demand was especially pronounced for resources and income-focused strategies.

Australian resource ETFs recorded their strongest month on record, drawing more than $205 million in net inflows as investors positioned for a recovery in commodity demand and maintained conviction in long-term themes such as critical minerals and the energy transition.

“The combination of tax changes and market performance is reinforcing the appeal of income strategies,” Mr Jocum said. “Australia high-dividend ETFs have outperformed the broader market by nearly 6% so far in 2026, and with greater emphasis now on after-tax outcomes, the yield factor is likely to remain in focus.”

The broader Australian ETF industry also recorded robust growth in May, with total market size increasing by $17.7 billion (+5.1%) to reach $364 billion across 487 products.

Over the past year, the Australian ETF market has grown by 33%, supported by $60.3 billion in net inflows, positive market performance, and continued conversion of unlisted funds into active ETF structures. The industry has delivered a five-year compound annual growth rate (CAGR) of 26.7% per annum.

Investor demand remains strong in 2026, with $5.4 billion flowing into ETFs in May, marking the third consecutive month of at least $5 billion in inflows. Year-to-date inflows have already exceeded $26 billion, placing the industry on track to surpass last year’s record $53 billion.

“With momentum building and the second half of the year typically a stronger period for flows, the ETF market is well positioned for continued expansion,” Mr Jocum said.

“As investors adapt to policy changes and evolving market conditions, ETFs remain a flexible and efficient vehicle for portfolio construction.”

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Please contact James Mitchell, Global X Australia | +61 413 619 034 | james.mitchell@globalxetfs.com.au

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^{1. Assets under management as at November 2025, Global X
2 Assets under management as at September 2025, Mirae Asset Financial Group
3 Assets under management as at November 2025, Mirae Asset Global Investments}

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