ETF investors lean into global diversification amid US volatility

Yasmine Raso

Senior Journalist

7 May 2026

The Australian exchange traded fund (ETF) market has seen one of its strongest quarters on record despite March’s “sharp” equity sell-off amid persistent global volatility, according to the latest analysis from Lonsec.

ETFs managed to record $15.6 billion in net inflows over the quarter, with total assets under management (AUM) reaching a new record of $343.5 billion in February before softening to $329.7 billion in March as a result of the drop in equity holdings.

Despite this, the figures indicate that overall AUM held in ETFs has surged by 36 per cent in the last 12 months, pointing to the fact that a structural shift in investor preference towards low-cost and efficient options is still underway.

Chad Troja, Manager, Direct Equities at Lonsec, also noted a rapid shift in sentiment among investors as they continue to grapple with the impact of global volatility, switching out of their US-tilted holdings and moved more in favour of diversifying their portfolios.

“Global equities remained the dominant allocation over the quarter, capturing nearly half of all ETF flows,” he said.

“Although, the allocation of flows when compared to 12 months ago have visibly shifted away from US-concentrated and hedged strategies toward broader global diversification.”

However, investors seem to be searching for growth exposure balanced with defensiveness as global equities still managed to capture $6.9 billion, well in front of Australian equities at $4.15 billion and Australian bonds at $2.73 billion.

Given the geopolitical tensions and supply disruptions underpinning the last 12 months of market performance, it comes as no surprise that commodities, precious metals and energy-themed products led the pack according to the research house. Cybersecurity, crypto-linked products and speculative growth exposures laid tt the other end of the spectrum.

Troja also highlighted the rise and rise of active ETFs in the Australian market, now accounting for approximately 36 per cent of listed ETFs.