Budget tax changes pivot investors to income assets

Binaya Dahal

Journalist

9 July 2026

JBWere’s Glen Bertram says the changes to capital gains tax and negative gearing have shifted investors from high-growth stocks towards income-generating assets, because of the lesser tax liability on their sale.

Bertram, head of asset allocation and portfolio management at National Australia Bank’s wealth arm, said the rotation from international to Australian equities reflects the adjustment as “offshore markets tend to be higher growth markets, and we traditionally have greater opportunities locally for income investing”.

“The main feature preventing more of this flow, for now, is that offshore equity markets have been performing very strongly,” he said.

Bertram said the tax changes were also beginning to influence housing and broader financial markets as investors reassess their portfolios and future investment decisions.

“This uncertainty is prompting some investors to take a more cautious approach as they assess purchase and investment decisions, with potential flow-on effects across parts of the broader economy,” he said.

Against this backdrop, Bertram believes fixed income presents the most attractive opportunity, as real inflation-adjusted returns for the asset class are amongst the strongest they have been in two decades.

“The conflict in the Middle East in the short term, along with underlying sticky inflation pressures, is keeping interest rates relatively high and keeping the pressure on the Reserve Bank,” Bertram said.

“We expect more investors will increase their allocation to fixed income given current yields and the defensive nature of the asset class, as well as the broader pivot to income investing driven by recent tax changes.”

While the tax-driven rotation towards income assets is reshaping portfolios, Bertram warned investors should not lose sight of growing AI concentration risk.

“If there is one thing keeping me up at night as a portfolio manager and asset allocator, it is the observation that there is really just one trade driving global markets, AI,” he said.

“There were only eight stocks that drove virtually all the gains globally in the first half of 2026 and they are all driven by AI, so there is a huge concentration risk in markets.

“Even from a domestic perspective, we have two stocks that are now more than 20% of the market and we have two sectors, materials and financials, that are 60% of the market.”