Income generating index ETFs gain traction post Budget

Index-based income ETFs have seen another record month of flows as the shift towards yield-focused funds gathers momentum, according to the latest ETF Market Scoop from Global X ETFs.

Index-based equity income ETFs attracted a record $309 million of inflows in June, building on the previous record of $255 million of flows in May.

Betashares data shows income ETF's hit a record last year in September at $346 million and then fell consistently to $173 million in April. Income ETFs have now picked up pace with $266 million and $321 million flows in the month of May and June respectively, according to Betashares.

Global X senior product and investment strategist Marc Jocum said the growth in income ETFs is striking given June is typically a quieter month for flows for the ETF industry.

"We saw a clear pivot in investor behaviour immediately following the Federal Budget, and that seems to be gathering momentum. Australian investors have digested the CGT reforms and are seemingly seeking out income-oriented strategies that may be better positioned under a higher capital gains tax regime," he said.

Global X said investors are prioritising after-tax outcomes, favouring investments that derive a larger proportion of returns from income rather than capital appreciation.

The month of June also marked the weakest month on record for gold ETFs in Australia with $252 million in total outflows.

Jocum said the recent pullback should be viewed in the context of gold's extraordinary run over recent years, with the metal having delivered one of its strongest bull markets in decades.

"Importantly, long-term demand remains robust, particularly among central banks, with recent surveys showing that 89% of central banks expect global gold reserves to increase over the next 12 months as countries continue to diversify away from traditional reserve assets," he said.

The Australian ETF market grew by $8 billion over the month to $372.1 billion across 494 products.

The 2026 financial year was the best financial year ever for ETF net flows with the industry taking in $61.6 billion in FY26, up 48% from FY25. The industry has now attracted around $30 billion year-to-date and remains on track to eclipse last year's record $53 billion.