3 ETFs designed to keep the income flowing

‘Income is back’ and ‘the reach for yield is over’.

I’m sure you’ve heard these lines before when it comes to income investing (heck, you’ve probably even heard them from me) and they are true, but there is something more interesting going on in income investing at the moment. 

Income used to be relatively straightforward: own an asset, collect the yield, and hope the distributions held up. Increasingly, income is no longer simply earned. It is being engineered.

ETFs are reshaping how investors think about cash flow generation. Rather than relying solely on traditional dividends or bond coupons, investors can now construct more targeted income outcomes using tools like covered calls, bank credit exposure and diversified yield-focused equity portfolios.

That does not eliminate risk. There are still no free lunches in markets. But it does give investors more flexibility around how they source income, manage volatility and diversify their return streams.

As Global X Senior Product and Investment Strategist Marc Jocum puts it: 

“Income investing today should really be about creating multiple sources and multiple diversified streams of income. That’s your best way to protect yourself against left tail risk or anything the market might throw at you.”

To unpack how that is evolving, I spoke with Jocum as part of Livewire’s Income Series 2026. In the interview above, he explains why Australia’s traditional income playbook may be under pressure, why bank credit is becoming increasingly attractive relative to bank equities, how covered call strategies can monetise volatility, and why diversified income streams may matter more than ever in a world of elevated uncertainty. 

He also outlines how Global X’s BANK, AYLD and ZYAU ETFs can work together inside a portfolio to help investors construct more resilient income outcomes.

INTERVIEW SUMMARY

The old income playbook is under pressure

According to Jocum, investors face a far more complex income landscape than they did a decade ago.

Dividend yields across the Australian market have been falling, the banks that traditionally anchored many income portfolios are increasingly challenged, and many income-producing asset classes are now struggling to generate meaningful real returns after inflation.

“We’re seeing three key problems with the income landscape,” Jocum says.

“The dividend yield here in Australia is at the lowest it’s been in decades outside of COVID.”

That is being compounded by growing concentration risk, with many investors still heavily reliant on bank equities at a time when valuations remain stretched, and earnings expectations are softening. 

At the same time, many traditional income-producing asset classes are now struggling to generate meaningful real returns after inflation.

Rather than relying on a single source of yield, Jocum argues investors should focus on building diversified and deliberately engineered income streams.

Why bank credit looks attractive

One of the clearest examples of that thinking is the Global X Australian Bank Credit ETF (BANK).

Instead of owning bank equities directly, BANK provides exposure to the debt side of the banks’ balance sheets through a mix of hybrids, subordinated debt and senior bonds.

Jocum argues the opportunity set is compelling because Australian banks remain among the most expensive globally on several valuation measures, while investors can still access attractive yields through bank credit without taking the same degree of equity risk.

“You are actually getting paid less to take on equity-like risk in the banking stocks where you can get access to the banking debt,” he says.

The appeal, according to Jocum, is not simply the yield itself - currently around 6% - but also the diversification characteristics.

Traditional equity and bond correlations have broken down in recent years, reducing the defensive benefits investors once expected from government bonds. BANK, however, introduces multiple layers of diversification through different parts of the bank capital structure.

Importantly, Jocum also sees BANK as a practical solution for investors dealing with the gradual phase-out of bank hybrids over coming years.

“For investors who are holding hybrids directly themselves and are worried about how to actually phase them out, let BANK do that for you,” he says.

How covered calls monetise volatility

The second piece of the portfolio construction puzzle is the Global X S&P/ASX 200 Covered Call ETF (AYLD). 

Covered call ETFs have grown rapidly globally, but Jocum believes many investors still misunderstand how they work and where they fit inside portfolios.

The strategy combines exposure to Australian equities with the systematic selling of call options over the portfolio. That creates an additional income stream through option premiums, on top of dividends and franking credits.

In volatile markets, those premiums can become especially attractive.

“When there’s a lot of volatility in the market, the cost for protection rises, meaning people are willing to pay you more to actually sell their protection,” Jocum says.

The trade-off, of course, is that upside participation becomes capped to some extent. But Jocum argues many investors focus too heavily on capital growth in isolation rather than total return outcomes.

“I’m urging a lot of investors to think about the total return perspective. Think about both the capital and the income profile,” he says.

That becomes particularly relevant in sideways or weaker equity markets, which historically have been favourable environments for covered call strategies.

Jocum notes that Australian equities may face a more challenging environment over the next year given slowing earnings momentum and the market’s limited exposure to major AI beneficiaries.

That potentially increases the appeal of strategies designed to generate income from volatility itself.

Diversifying yield sources

The third ETF discussed is the Global X S&P/ASX 200 High Dividend ETF (ZYAU).

Unlike many income portfolios that become heavily concentrated in banks, ZYAU spreads exposure across sectors including resources, infrastructure, insurers, industrials and energy companies.

The aim is not simply to maximise yield, but to create more resilient and diversified income streams across different economic conditions.

“It’s consistently paid an income profile of around about one to one-and-a-half percent above the broader ASX 200,” Jocum says.

Importantly, the strategy also limits concentration risk through caps on both individual securities and sector exposures.

That diversification theme sits at the core of Jocum’s broader philosophy around income investing, which involves creating multiple sources and multiple diversified streams of income. 

Preparing rather than predicting

Looking ahead, Jocum believes investors should spend less time trying to predict the next macro outcome and more time building portfolios that can handle multiple scenarios.

“I think it’s best to prepare rather than predict,” he says.

That means combining income sources that respond differently across market environments. Bank credit for defensive yield, covered calls for volatility monetisation, and diversified equity income for broader cash flow generation. 

Together, BANK, AYLD and ZYAU represent different ways of engineering income outcomes rather than relying solely on traditional dividend investing.

In a market where uncertainty around rates, growth and equity concentration remains elevated, that flexibility may prove increasingly valuable.

ETF

Global X Australian Bank Credit ETF (BANK)

Australian Fixed Income

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ETF

Global X S&P/ASX 200 Covered Call ETF (AYLD)

Australian Shares

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ETF

Global X S&P/ASX 200 High Dividend ETF (ZYAU)

Australian Shares

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