Australian investors shift to income‑focused ETFs amid rate hikes and CGT reforms

Data from Betashares shows Australian investors are moving money into income‑focused exchange‑traded funds that emphasize dividends, bonds and cash. In June, inflows to cash and fixed‑income ETFs more than doubled to AU$1 billion, accounting for 30 % of total ETF flows – the highest share since November. The shift follows the Reserve Bank of Australia's aggressive interest‑rate hikes and anticipation of capital‑gains‑tax changes that will tax total gains adjusted for inflation, eroding the current 50 % discount.

Betashares investment strategist Tom Wickenden said three RBA hikes “pushed inflation and unemployment back into focus, rewarding income and value over growth.” GlobalX reported a record US$309 million inflow into equity‑income ETFs in the same month, underscoring a broader structural trend. Analysts note that higher dividend payouts and franking credits may become more attractive to investors.

A separate iShares survey of over 3,000 Australians aged 25‑44 found that 36 % of ETF owners already use income‑focused products, and 44 % of those planning to invest in ETFs in the next year expect to choose income strategies. The survey links the trend to cost‑of‑living pressures and upcoming tax reforms.

Beyond Australia, French seniors are also turning to ETFs to boost retirement savings, attracted by low fees and diversified exposure. Financial advisers highlight ETFs as a way for older investors to generate regular income while preserving capital.