Record Inflows into ETFs Amidst Property Market Shifts
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Record Inflows into ETFs Amidst Property Market Shifts
- Exchange-Traded Funds (ETFs) have seen unprecedented investor interest, with US-listed ETFs attracting over $1 trillion in the first half of 2026, putting them on track to exceed $2 trillion in inflows by year-end.
- This surge in ETF investment comes as the Australian federal budget changes, effective July 1, 2027, will eliminate negative gearing on established residential properties and replace the 50% Capital Gains Tax (CGT) discount.
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Investors are increasingly turning to Exchange-Traded Funds (ETFs), with global inflows reaching record highs in 2026. US-listed ETFs alone have attracted over $1 trillion in the first half of 2026, and are projected to reach over $2 trillion by the end of the year, surpassing the previous record of $1.5 trillion set in 2025. This trend highlights a significant shift in investor sentiment and asset allocation.
A key factor influencing this movement, particularly in Australia, appears to be recent changes to property investment regulations. The Australian federal budget, taking effect on July 1, 2027, will end negative gearing on established residential properties, meaning losses from these investments will no longer be deductible against salary income. Additionally, the 50% Capital Gains Tax (CGT) discount is being replaced. These changes make new builds the only exception for negative gearing, aiming to encourage more housing supply.
The alterations to property taxation are making ETFs a more attractive option for many investors due to their diversification and liquidity benefits. While property investing is not “dead,” the new rules emphasize the importance of strong fundamentals, cash flow, debt management, and asset quality. For beginners, ETFs are now considered a highly compelling investment.
The increased interest in ETFs is not limited to Australia. Globally, investors are “stockpiling into the tech space,” with robotics and AI emerging as top investment themes. Technology sector ETFs have attracted $44 billion in inflows in the first half of 2026. Broadly, equity and bond ETFs combined captured $995 billion of inflows in the first half of 2026, accounting for 80% of total ETF investments. Emerging market ETFs have also seen record inflows, reaching $38 billion year-to-date in 2026. This demonstrates a “risk-on” positioning among many investors heading into the second half of 2026.