The latest data from Global X points to a significant shift by Australian investors towards income-generating strategies following proposed CGT changes in the Federal Budget.
The proposed changes in the 12 May Budget have raised the prospect of higher taxes on capital gains.
As a result, Global X found investors are increasingly prioritising after-tax returns, favouring investments that generate a larger share of returns from dividends and income rather than capital growth.
In May, the firm reported Australian yield-focused ETFs recorded their strongest month of inflows, attracting $243 million as investors sought more income-oriented and tax-efficient returns.
It came as Australian share ETFs as a whole attracted a record $2.3 billion in net inflows, accounting for about 42 per cent of total ETF flows for the month — their highest share since August 2023. This was out of a total $5.4 billion in overall ETF flows, the third straight month of at least $5 billion in inflows.
For senior product and investment strategist Marc Jocum, investor behaviour during the month points to a “clear pivot”.
“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,” Jocum said.
He added that despite a challenging domestic backdrop of sticky inflation, rising unemployment and subdued growth, the data also shows investors are increasingly comfortable investing locally and more confident in domestic markets and familiar sectors.
The findings align with broader commentary on rising interest in dividend and high-yield strategies, including comments made by Betashares senior investment strategist Cameron Gleeson to Investor Daily just days after the Budget announcement.
Beyond the tax advantages, he noted that ASX volatility had already driven investors towards products such as the firm’s Australian high-yield ETF, HYLD, launched in August last year and among its most successful in 2025.
At the time, he explained that the trend is unfolding as the ASX is experiencing a leadership reshuffle.
The dominance of large banks – particularly the Commonwealth Bank of Australia – has recently given way to BHP becoming the most valuable company on the Australian exchange amid a new mining supercycle.
Gleeson highlighted that BHP represents a dual success within these trends, offering a relatively attractive yield compared with CBA as well as leading the mining boom.
Additionally, Global X data uncovered strong demand for Australian resource ETFs.
The category posted a record month in May, attracting over $205 million in net inflows as investors positioned for a rebound in commodity demand and stayed focused on 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,” Jocum said.
“Australia high-dividend ETFs have outperformed the broader market by nearly 6 per cent so far in 2026, and with greater emphasis now on after-tax outcomes, the yield factor is likely to remain in focus.”
Increased interest in income-focused ETFs was also evident in BlackRock’s announcement earlier this week that it plans to expand its Australian active ETF range with a new income-focused option.
When launched, it will be only the third actively managed ETF from iShares in the Australian market.
Beyond specific ETF flow trends, Global X found the broader Australian ETF industry also saw strong growth in May, with total market size increasing by $17.7 billion (5.1 per cent) to reach $364 billion across 487 products.
Over the past year, the Australian ETF market has now grown by 33 per cent, supported by $60.3 billion in net inflows, positive market performance, and continued conversion of unlisted funds into active ETF structures. That means the industry has delivered a five-year compound annual growth rate (CAGR) of 26.7 per cent per annum.
Looking ahead, the firm said flows are well placed to exceed last year’s record $53 billion in inflows.
“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,” Jocum concluded.
