7 ETFs Aussie investors are leaning into right now

Please note, this interview was recorded Tuesday 10 March, 2026

For those who have been playing the game of markets for decades, think back to the world before ETFs. The ways to express a view on change were far more limited - and frustrating.

If war broke out, you were largely confined to ASX-listed companies, often exposed to second-order effects. If commodities like gold or oil were surging, the same constraints applied, along with all the company-specific risks that came with them.

Today, the landscape looks entirely different. Through ETFs, investors now have myriad ways to gain real-time exposure to the themes shaping markets, far more efficiently. And that matters, because markets themselves are more dynamic than ever.

As Betashares’ Senior Investment Strategist Cameron Gleeson puts it:

“Markets can be incredibly dynamic and change on a dime, and that can really catch you off guard.”

From geopolitical shocks to shifting sector leadership, investors are being forced to rethink how they build and manage portfolios, and the tools they use are becoming just as important as the views they hold.

That shift is visible, with flows responding quickly to macro developments, while structural features of the Australian market, from the dominance of banks and miners to the persistent difficulty of active outperformance, are pushing investors toward more systematic and rules-based approaches.

Whether it’s expressing tactical views, enhancing returns through factors, or building more resilient income streams, the opportunity set has expanded. The edge now lies in how effectively investors use it.

Betashares' Cameron Gleeson being interviewed by Livewire's Chris Conway

INTERVIEW SUMMARY

How investors are responding to volatility

Periods of market stress tend to reveal what investors are really thinking about and the opportunities they are pursuing, and recent ETF flows are no exception. According to Gleeson, geopolitical tensions have driven demand for targeted exposures that can act as portfolio hedges.

Speaking to the positioning since the breakout of war in the Middle East, Gleeson observed:

"It's interesting to note some of the flows that we've seen into funds that we'd consider a geopolitical hedge into our oil-based ETFs - ASX: OOO [Betashares Crude Oil Index Currency Hdg Cmplx ETF] or ASX: FUEL [Betashares Global Energy Companies Cur Hdg ETF]

We've also seen investors gravitate towards ASX: ARMR [Betashares Global Defence ETF], which is our global defence contractor's ETF. So it's just really about providing all sorts of vehicles so investors can handle all sorts of situations".

At the same time, more traditional behaviour patterns are re-emerging. In volatile environments, Australian investors continue to lean into domestic equities.

“Another aspect we tend to see in these periods of volatility is that Australian investors will tend to pivot away from global equities and back to Australian equities.”

The challenge of the Australian market

That shift back home is not without its challenges. The Australian equity market remains highly concentrated and cyclical, creating a difficult backdrop for consistent outperformance.

Gleeson is direct in his assessment:

“We talk a lot about the challenges of stock picking and fundamental analysis leading to outperformance in Australia. We know what the overall results in terms of active management outperformance look like - quite dire.”

Rather than trying to fight those structural realities, Betashares’ approach is to offer investors a broader toolkit. That includes both tactical sector exposures and long-term portfolio building blocks.

“If we think about the Australian equity market, some of the concentration we see in our market, the cyclicality, a lot of the sectors are very cyclical. This is actually fertile ground for systematic factor-based approaches to add outperformance over the long term.”

Factor investing as a structural solution

Factor ETFs (i.e. ETFs that focus on factors such as quality, value, etc) sit at the centre of that approach, offering a rules-based alternative to traditional active management.

“Very simply, factor ETFs are a rules-based approach. The ETFs are very low-cost versus, for example, active management. And what we've seen is the efficacy of some of these factors over the long run to produce outperformance is very strong.”

Betashares FTSE Rafi Australia 200 ETF (ASX: QOZ), for example, takes a different approach to traditional index construction. Rather than weighting companies by market capitalisation, it weights them by their economic footprint, creating a dynamic tilt that evolves over time. Gleeson says QOZ’s value tilt naturally shifts with market leadership, which in Australia often rotates between banks and miners. After a multi-year period of bank outperformance, the fund rebalanced toward resources. That shift has recently paid off.

“If we look over the last 12 months, that overweight to miners has paid dividends. So QOZ's up 11% over the last 12 months. It's a tilt of value, but it's also a way of playing the mean reversion we tend to see in our banks and miners.”

Betashares Australian Quality ETF (ASX: AQLT), by contrast, focuses on quality, but is specifically designed for the nuances of the Australian market.

“AQLT is built differently. It's built for the Australian market. We still have a weight to the top stocks in the market, but we weigh them by quality. So we still have that anchor of the banks. They're still in there, and we have all the high-quality mid-cap stocks.” The result has been consistent performance.

“What that's meant is in that period when banks outperformed, AQLT kept up with markets and indeed outperformed. So its return since inception is more than 3% outperformance, which is quite incredible, and it's produced great results in all sorts of market conditions.”

Rethinking income in Australian portfolios

Income remains a cornerstone of Australian portfolios, but Gleeson argues that traditional approaches can expose investors to unnecessary risk.

“ASX: HYLD [Betashares S&P Australian Shares High Yield ETF] is designed to be an exposure to Australian equities, which is going to give you that broad market exposure, but an uplift on the income. So roughly 30% higher dividend yield versus the broad market.”

Crucially, the strategy goes beyond simple dividend forecasts.

“It doesn't just rely on those forecasts because sometimes those forecasts can be stale. It uses market signals. What's the momentum? What does that overall expected yield look like? Is it basically at a level which is unsustainable? What's the risk look like relative to the yield? So using these other market-based signals, it tries to identify and eliminate what we call dividend traps.”

Consistency of income is another key differentiator.

“The ETF distributes monthly, that consistency of income is a really strong feature versus, for example, holding the bank stocks where you get two dividends a year.”

Filling gaps in Australian portfolios

ETFs are also increasingly used to address structural gaps in Australian portfolios, particularly in underrepresented sectors such as technology.

“ASX: ATEC [BetaShares S&P/ASX Australian Technology ETF] tracks the S&P All Technology Index. It's Australia's Technology Index. As a sector, IT only represents 2% of our broad market, but it has been absolutely in the news through this earning season.”

Recent flows suggest investors are actively using these vehicles to position for recovery.

“It's really interesting to note that one of the strongest ETFs for inflows across February was in fact ATEC across all the Australian ETFs. There are a lot of investors interested in buying the dip, they believe that some of these names have a reasonable moat around them, cheaper valuations and opportunity to participate in upside.”

Why ETFs are gaining ground

The broader shift toward ETFs reflects both structural advantages and changing investor behaviour. While many Australians still favour direct equities, this can lead to concentrated portfolios and unintended risks.

“If I look at my mom's portfolio as an example, she's done very well. She's got a large position in the CBA that she got in the IPO and DRPed her way through and that dominates her portfolio. It's actually quite a tilted portfolio, but there's a lot of risk there.”

By contrast, ETFs offer a more systematic and cost-effective approach.

“The great thing about these factor ETFs, is that they're rules-based. The efficacy of those factors over the long term has been proven.

And not only are they something that can drive strong returns, but they're also very low cost versus trying to execute any of these sorts of strategies off your own bat with a brokerage”

In a market that can shift rapidly, that consistency is becoming increasingly valuable.

“I think what you'll find is that using an ETF is a far more cost-effective approach and a far more consistent approach.”