Australian investors are increasingly looking beyond the local share market as concerns grow that the ASX’s heavy reliance on banks and miners may be limiting long-term growth opportunities, according to Global X.
ETF flow data from Global X ETFs showed strong demand for US equities in April, with Australian investors recording the largest monthly inflow into US-focused ETFs since December 2024 and the third-highest on record.
The trend has continued throughout 2026, with US equity ETFs attracting $1.5 billion in inflows year-to-date as investors seek greater exposure to sectors tied to artificial intelligence and global technology growth.
The growing appetite for offshore markets comes as Australian equities continue to lag global peers.
According to the firm, the local market has underperformed by 9 per cent this year amid weaker economic growth expectations, persistent inflation concerns, rising fiscal deficits and earnings downgrades across the banking sector.
Global X ETFs senior product and investment strategist, Marc Jocum, said investors were increasingly questioning whether traditional portfolio allocations centred on Australian equities remained appropriate in the current environment.
“For decades, Australians have naturally gravitated toward the local share market, but the reality is the Australian market is highly concentrated, and certain parts are increasingly becoming more disconnected from the areas driving global growth,” Jocum said.
While the Australian market has historically benefited from strong exposure to financials and resources, the dominance of those sectors has also left investors with limited access to many of the companies leading the global AI expansion.
“The Australian share market remains dominated by banks and mining companies, while many of the world’s fastest growing and most innovative businesses are listed offshore,” he said.
“With the local market potentially facing multiple headwinds, investors are increasingly asking whether simply owning the broad Australian index is still the best long-term strategy.”
Notably, Australia’s largest bank – CBA – recently recorded its biggest one-day fall on record, down by 10.4 per cent, sparking concern over bad and doubtful debts and exposure to its property investor loan book.
Rather than abandoning Australian equities entirely, some investors are instead shifting towards more selective domestic strategies that focus on earnings growth and valuation discipline.
One example highlighted by Global X was its S&P Australia GARP ETF (GRPA), which targets 50 Australian companies screened for both growth and value characteristics rather than weighting holdings purely by size.
Global X said this strategy has outperformed the broader Australian market by more than 4 per cent so far in 2026, supported by stronger exposure to resource and energy companies and lower allocations to banks.
Jocum said the shift reflected a broader reassessment of concentration risk within Australian portfolios.
“The conversation is no longer just about adding a small thematic investment on the side for a bit of spice,” he said.
“It’s becoming a much bigger question around whether Australians are too heavily concentrated in one market and whether their core portfolio is positioned for the future.”
