In a year that started with high market valuations and the ever-present threat of inflation, there have been plenty of surprises to unnerve investors. Despite this, markets have been largely resilient, with many investors staying the course.
The growing popularity of the ETF market has made it a useful marker of investor views and behaviour – it is easy to access, offers daily trading and swift exposure to different themes, depending on your views. In the last financial year, a record number of ETFs were listed – 72 – and the funds under management continues to jump annually.
In this article, I’ll explore ETF flows on the ASX in 2026 so far and where investors have moved, with insights from Rory Cunningham, Senior Manager, Investment Products for the ASX, Arian Neiron, CEO and Managing Director – Asia Pacific for VanEck and Hugh Lam CFA, Investment Strategist for Betashares.
In a volatile year, markets have, to an extent, shrugged off bad news and continued to grow. The NASDAQ 100 gained just over 8% in the first half of 2026, though the S&P/ASX 200 ended the half flat.
The tech sector saw a downturn in the start of the year off the back of concerns over the size of AI spend in major firms, concerns of AI-disruption in industries like software and fears that earnings growth was unsustainable. There was recovery in more recent months, though July has seen significant sell-offs in chip stocks in particular due to disappointing growth forecasts and ongoing concerns about the AI-rally.
One of the significant surprises in the year to date was the US war in Iran. The combination of geopolitical uncertainty and an oil supply shock initially startled investors, though many parts of the market recovered reasonably quickly.
On a domestic front, Australia’s persistent inflation challenges may spell bad news. In some sectors, it was anticipated to increase the appeal of the domestic bond market. Investors are still watching for an additional hike later in 2026.
Some of the biggest investment shifts have risen post the Federal Budget announcements in May, with policy changes affecting the application of capital gains tax and negative gearing.
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Global equities dominate around half the asset spread for ETF investment, with Australian equities taking up around a quarter of the funds under management.
Flows largely reflect this asset allocation, with ASX’s Cunningham noting, “from a longer-term perspective, we do still see that ETFs are used to gain access to global equity strategies because it’s harder to do this yourself.”
“Within the Australian equity universe, broad market exposure – particularly S&P/ASX 200 and S&P/ASX 300 – is still popular, but we’ve also been seeing flows into dividend and high yield strategies,” he added.
Source: ASX Investment Product Monthly Reports January-June 2026.
Cunningham is seeing an ongoing trend towards Fixed Income investments – both in terms of investor flows in this direction and increasing product choice through issuers coming to the market.
“In this higher interest rate environment, the fixed income asset class is more attractive to investors and we’ve seen significant growth in adoption over the past few years, not just in ETFs but in other close-ended structures, like retail investment notes and listed investment vehicles,” Cunningham says.
The ASX is also increasingly seeing ETFs become the product of choice for new investors, while demand from the financial advice industry continues to boom.
Looking through the flows, there was a temporary shift in flows towards Australian equities instead of international equities in May, which may reflect a combination of factors – one being the Federal Budget announcement which may have seen many investors shift into income-focused investments.
Lam notes that this pattern was also seen in Betashares’ suite of ETFs, with their Australian equities ETFs drawing $2.3bn in the year to date.
“The shift in flows toward this area of the market may be reflecting an element of home bias following the onset of the Middle East conflict given flows have materially increased into the asset class from March onwards. Australian investors are potentially allocating assets toward companies listed on our local market that they may be more familiar with,” Lam says.
He adds that uncertainty also tends to increase investor interest in income, with Australian equities having an additional appeal in the form of franking credits. For example, the Betashares S&P Australian Shares High Yield ETF has received consistent inflows totalling $28m in the first half of the year.
VanEck’s Neiron highlights that the tilt towards Australian equities is also “a rational response to how concentrated and expensive global markets have become.”
He notes that investors have been allocating to low-cost domestic beta for their core holdings.
International demand continues to build for investors, and VanEck found sharpest investor interest for their international strategies in the year to date. The VanEck MSCI International Quality ETF received the strongest single flow of any VanEck strategy at close to $510m.
Both Betashares and VanEck highlighted a growing demand for emerging markets from investors across the first half of 2026. In fact, Neiron says the VanEck MSCI Multifactor Emerging Markets Equity ETF saw flows of more the triple the previous record for the first six months of a calendar year.
Beneath the headline flows, Neiron believes the defining behavioural shift of 2026 so far has been selectivity.
“A year ago, investors were still comfortable owning the market broadly. This year they are being far more deliberate about precisely what they own and why. In a world of elevated geopolitical risk, stretched valuations and a market concentrated in a handful of mega-cap names, investors have stopped buying the market indiscriminately and started making choices,” Neiron says.
He has been surprised by the scale of the investment rotation into value and emerging markets.
“Both had been unloved for years, so to see flows triple and the number of new investors has more than doubled in both of those strategies, is a genuine change in behaviour rather than a blip,” he says.
He’s also seen significant uptake of the VanEck Gold Miners ETF, with investor numbers beyond modest net flows.
“When the number of investors moves that much more than the dollars, it is a broadening base treating gold as portfolio insurance and that is conviction quietly building,” Neiron explains.
Given the struggles of the tech sector earlier this year, Lam was surprised to see flows into the Betashares S&P/ASX Australian Technology ETF.
“Investors see opportunities for this sector to rebound and may be acknowledging the fact that disruption risk is a natural feature of technology investing, but also presents opportunity for incumbents to integrate and adapt and new entrants to grow,” he says.
Another beneficiary across the last six months has been uranium. The Betashares Global Uranium ETF attracted $108m in inflows in the last six months, which Lam attributes to the growth in energy-hungry AI datacentres and workloads requiring energy, while uranium production continues to fall short.
The earlier mentioned selectivity that Australian investors have displayed in 2026 looks set to continue.
As Neiron points out, we are living in an uncertain environment between geopolitical volatility, high market concentration and an unclear path for interest rates.
“For more than a decade, simply owning the index was enough for many investors but we think the next phase of this market rewards selection and the flows are already starting to say so; at an industry level, plain beta has fallen from around 57 per cent of rolling flows in mid-2024 to about 41 per cent today as investors spread out,” Neiron says.
In keeping with this, Lam suggests that smart beta flows are likely to be strong and consistent, with investors continuing to pair these alongside core broad-based offers. He also sees continued demand for international exposures beyond the US as well as fixed income given the challenging environment for income investing.
“More opportunistically, strength in our resources sector off the back of structural demand for strategically important commodities like copper will be a benefit for our major miners,” Lam says, anticipating greater interest in resources and metals across the latter part of 2026.
Being selective and following solid investment principles have been keynotes for success so far this year.
Despite the geopolitical noise, Cunningham describes flows as being almost ‘business as usual’, reflecting normal patterns of portfolio allocation – investors are better educated than ever and focused on their strategies. He expects this to largely continue.
Going into the second half of the year, VanEck’s Neiron suggests that investors consider how they balance their portfolios and be deliberate in their decisions, highlighting the use of strategies like quality and value, diversified geographic exposure such as emerging markets and incorporating real asset insurance like gold.
“Transparent, rules-based building blocks are what let investors be precise about the exposures they actually want,” he says.
In essence, focus on your overall strategy and mix assets carefully to meet this. Or ‘business as usual’ for ETF flows.
HYLD aims to track the performance of an index (before fees and expenses) that provides exposure to a share portfolio of 50 high-yielding Australian companies.
QUAL gives investors exposure to a diversified portfolio of quality international companies listed on exchanges in developed markets around the world (ex Australia). This fund aims to provide investment returns, before fees and other costs, which track the performance of the Index.
GDX gives investors exposure to a diversified portfolio of companies involved in the gold mining industry. GDX aims to provide investment returns, before fees and other costs, which track the performance of the Index.
ATEC aims to track the performance of the S&P/ASX All Technology Index (before fees and expenses). The Index provides exposure to leading ASX-listed companies in a range of tech-related market segments such as information technology, consumer electronics, online retail and medical technology.
URNM aims to track the performance of an index (before fees and expenses) that provides exposure to a portfolio of leading companies in the global uranium industry.
VLUE gives investors a diversified portfolio of 250 international developed market large- and mid-cap companies, with high value scores as calculated by MSCI at each rebalance. This fund aims to provide investment returns, before fees and other costs, which track the performance of the Index.
Disclaimer: This article is prepared by Sara Allen. It is for educational purposes only. While all reasonable care has been taken by the author in the preparation of this information, the author and InvestmentMarkets (Aust) Pty. Ltd. as publisher take no responsibility for any actions taken based on information contained herein or for any errors or omissions within it. Interested parties should seek independent professional advice prior to acting on any information presented. Please note past performance is not a reliable indicator of future performance.
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