ETF investors go risk-on

Investment inflows into exchange traded funds (ETFS) more than doubled in July indicating a rebound in investor sentiment, according to investment platform, according to InvestSMART Group.

It said that the latest data from the Australian Securities Exchange (ASX) show that $5.5 billion had flowed into ETFs in July – rising 160% month-on-month from the $2.13 billion recorded in June.

The company said global equity ETFs had dominated investor preferences in July, attracting inflows of $2.52 billion versus just $0.74 billion in June, while Australian equity-based ETFs had run a distant second, recording inflows of $998 million in July compared to $636 million in June.

“Interest rate cuts that kicked off in February, with expectations of more cuts to follow, have excited investor interest in Australian Fixed Income, which saw July inflows of $798 million compared to $532 million in June,” the InvestSMART commentary said.

“Global Fixed Income attracted a $382 million inflow in July, more than double the $155 million in June 2025.”

Commenting on the data InvestSMART chief executive, Ron Hodge said investors were clearly keen to lock in higher rates on bonds while also benefitting from capital appreciation as bond prices rose.

“I would expect however, that most of the investors shifting money into bond ETFs are retirees locking into higher yields, who will hold the asset to maturity,” he said.

Hodge said the data represented a clear indicator of ‘risk-on’ sentiment among Australian investors.

“It’s not just about investors embracing local and international equities. The lower interest rate environment has seen investors veer away from cash-based ETFs.”

July inflows into cash ETFs were down to $255 million, compared to $314 million in June 2025.