
Bond ETFs reshaping Australia’s fixed income market

Due to the flight to stability amid global trade and geopolitical uncertainty, fixed income was the anchor allocation for Australian investors in 2025 which was record-breaking year for the asset class. Given that market volatility remains at elevated and structurally higher levels in 2026, the lurch in fixed income is expected to remain high, while the new investing regime characterised by higher inflation is likely to give it an extra kicker. Bottom line is, the way Australian investors are accessing their fixed income exposure is materially impacting how bond markets function. While total net inflows into managed fund fixed income strategies reached $17.3 billion, those choosing access to fixed income via ETFs have gone through the roof. Within the ETF sector specifically, fixed income attracted between $11.6 billion and $14 billion in record inflows, nearly doubling the previous year's result. What’s clearly evident from bond ETF turnover is that investors are increasingly turning to ETFs when traditional fixed income markets struggle to function properly. It appears that fixed income ETFs are outpacing the traditional bond market primarily due to their role as a pressure valve offering a critical layer of "s







