Younger Aussies defying tradition by pouring into income ETFs

Yasmine Raso

Senior Journalist

15 July 2026

iShares’ inaugural ETF Insights report has found younger Australians are increasingly leveraging exchange traded funds (ETFs) to tap into income investing, indicating that the strategy traditionally dominated by retirees is serving a new purpose amid heightened cost of living and financial security concerns.

According to the ETF issuer’s survey of over 3,000 Australians over the age of 18, those aged between 25 and 44 were the most likely to have started investing to “generate a regular income outside of work”.

Of those who are ETF investors, 36 per cent already use income ETFs and 44 per cent of those considering investing in ETFs in the next 12 months are likely to invest in income-focused products.

Tamara Haban-Beer Stats, ETF Specialist at iShares, said the shift in sentiment among younger investors has showcased their current perspective on financial security and how ETFs offer an alternative pathway to growing their wealth, especially considering challenging housing market conditions.

“Rather than waiting until retirement, many Australians are looking for ways to build additional sources of income while they’re still working. For some, it’s about keeping up with the cost of living,” she said.

“For others, it’s about creating more flexibility, whether that’s reducing work hours, taking a career break or potentially working towards an early retirement.

“ETFs have played an important role in that shift because they’ve made it easier and more accessible for everyday Australians to access diversified investment strategies. [The data] suggests demand for income solutions continues to grow.”

The research also found that among existing ETF investors, 46 per cent said they had gravitated towards income-focused strategies to have more control over their financial future and 43 per cent felt they can grow their money more effectively than cash saving.

Haban-Beer Stats also noted that the recent tax regime changes yet to come into effect, especially those related to capital gains tax (CGT), may tip more investors in favour of income strategies.

“Income-focused ETFs are designed to provide regular distributions from investments such as dividend-paying shares or bonds, while many traditional ETFs are generally more focused on long-term capital growth,” she said.

“One of the benefits of income ETFs is that investors can receive a more regular stream of income without having to build and manage a portfolio of individual securities themselves.

“They’re also simple and flexible to trade in and out of, and don’t require a large minimum investment amount to get started, which may make them more attractive versus other common income-generating investment options like property or term deposits.

“From a tax perspective, the incoming changes to CGT may prompt investors to rethink their investment mix. With income strategies now receiving more equal tax treatment compared to growth strategies, income products may become more attractive for some investors depending on their circumstances as we look toward the new tax regime.”