Cybersecurity, tech ETFs strongest performers in May

ETF performance in May was dominated by cybersecurity and broader technology themes, with the sector delivering exceptional returns across multiple strategies.

While the Global X Cybersecurity ETF returned 36.5% for investors, Betashares Global Cybersecurity ETF provided a return of 31.75%.

South Korea retained its place from the prior month, continuing to reflect strong investor interest in the region's technology-heavy market. iShares MSCI South Korea Capped Index ETF returned investors 31.6% for the month.

Asian technology exposure also featured, reinforcing a broader theme of outperformance across innovation-driven, high-growth equities.

ETF flows in May were broadly in line with April at $5.3 billion. Australian equities claimed the top spot for the month at $2.24 billion, narrowly ahead of international equities at $2.18 billion.

Cash & fixed income fell sharply to $494 million from $1.1 billion in April. Short exposures swung back into negative territory, and commodities returned to positive flows after April's outflow.

"Global equity markets extended their rally through May. S&P 500 companies reported 27% year-on-year earnings growth in Q1 2026, more than double consensus, driven by the hyperscaler capex cycle," Betashares investment strategist Tom Wickenden said.

"Emerging markets were a standout, the MSCI EM index rose 9.7% as investors rotated into Asian chip manufacturers as a higher-beta, cheaper alternative to US mega-cap tech. Korea and Taiwan were the principal beneficiaries. Asian technology and broad emerging market ETFs capture this exposure on the ASX."

The Australian ETF industry set a new record, reaching $364 billion in funds under management after a third consecutive month of net flows above $5 billion. Strong inflows, combined with positive global market performance, pushed the industry above $350 billion for the first time.

"Domestically, the 12 May federal budget was the major event. The proposed removal of the CGT discount for investments falls unevenly across vehicle types. Unlike direct portfolios and managed funds, ETFs can better manage turnover through in-specie creation and redemption, avoiding internal capital gains crystallisation under the revised regime," Wickenden said.