4 ETFs to anchor your income in a declining yield environment

Interest rates are falling and dividends at the share market level are shrinking. For investors who rely on their investment portfolios for income, the question is sharper than ever: where to find consistent cash flow?

The traditional options – savings accounts and term deposits – have long been the “safe havens” of income investing. But today, they don’t deliver the way they once did.

And this isn’t just a retiree’s problem. Income matters at many stages of life, be it saving for a home deposit, taking a career break or starting a family. Whatever your goals, one truth holds: as you get closer, you want your savings protected.

This raises the key question: if the old playbook of cash and dividends is running out of road, where should investors look next?

Cash no longer goes far enough

For decades, the default move has been simple: park extra cash in a savings account or term deposit. And plenty of Australians still do.

According to APRA, Australians held over $1.4 trillion in bank deposits.¹ This is a figure that continues to grow despite falling interest rates and suggests many Australians are content with accepting lower returns as a trade-off for this security.

But while term deposits and high interest savings accounts are familiar, these vehicles often come with conditions like early access penalties or notice periods. This makes term deposits a less flexible vehicle especially for investors who need optionality. Locking in cash also exposes investors to reinvestment risk, meaning you could miss out on higher returns had the money been invested in other asset classes.

In addition, term deposit interest rates have declined significantly, largely in line with the RBA’s rate-cutting cycle.

As of September 2025, the best 1-year term deposit rate you can find at any Big Four bank today is 3.8%². That is only marginally higher than the RBA cash rate and well down from their late 2023/early 2024 highs³.

Income from shares is also declining

Declining interest rates isn’t the only challenge complicating the search for yield – dividend income from shares has also been shrinking. Since peaking in 2023, the ASX 200’s dividend yield has dropped to its lowest level in 25 years (excluding the Covid pandemic)⁴.

Several of Australia’s largest listed companies (BHP⁵, Woolworths⁶ and Reece⁷ among them) trimmed their full-year dividends in the most recent reporting season, leaving even diversified share portfolios exposed to unexpected cuts. These developments underscore the need to consider strategies beyond traditional shares and cash.

The ETF that can serve as a cash anchor

This is where enhanced cash or defined income ETFs can step in. These products provide access to assets typically reserved for institutional investors, offer regular income and give investors the opportunity to lock in today’s rates before they may go lower.

For investors already holding or considering adding defensive allocations, fixed income ETFs could represent a meaningful upgrade to traditional cash strategies.

One ETF idea that can help upgrade your income investing experience is Betashares Australian Cash Plus Active ETF (ASX: MMKT).

MMKT invests in the kinds of cash and money market securities that are often reserved for institutional investors and is designed as a core cash holding in portfolios. The fund looks to deliver enhanced monthly income from cash and money market securities, while maintaining a high level of capital stability.

Since its inception on 22 November 2023, MMKT has delivered a better total return⁸ on less volatility than the Bloomberg AusBond Bank Bill Index (BAUBIL Index)⁹. Over the last five years, BAUBIL has delivered a total return of 12.96%¹⁰. MMKT’s current yield to maturity net of fees of 3.93% (as at 22 September 2025)¹¹ is higher than both the best 1-year term deposit rate available¹² and the forward dividend yield of the ASX 200¹³.

MMKT can be a practical choice for those seeking stability, liquidity and a reliable core cash holding in their portfolio. The fund is a good fit for investors who want their cash to work harder without sacrificing peace of mind. But for investors seeking more than just a cash anchor, there are also options that provide predictable, attractive income with fixed maturity dates.

Predictable and attractive income

Given the limitations and trade-offs that come with term deposits and term annuities, many investors are looking beyond these traditional options.

That’s where Betashares Defined Income Bond ETFs can come in. This Australian-first range combines the features of an individual bond with the benefits of an ETF. There are three ETFs in the range:

• Betashares 2028 Fixed Term Corporate Bond Active ETF (ASX: 28BB)
• Betashares 2029 Fixed Term Corporate Bond Active ETF (ASX: 29BB)
• Betashares 2030 Fixed Term Corporate Bond Active ETF (ASX: 30BB)

Each fund invests in a mix of investment-grade Australian corporate bonds and looks to deliver fixed monthly income. Monthly distributions can be a great benefit to investors who value predictable cash flow.

Like a bond, each fund has a set maturity date – at which point, investors receive the value of their units if held to maturity. The fund’s name reflects its bond maturity window; for example, 28BB holds bonds maturing in the 12 months leading up to May 2028. But like an ETF, you can buy or sell them on the ASX as you would any other fund. To find out how much income you could be earning with these ETFs, you can check out our yield and cashflow calculator.

An anchored collection of ETFs for unpredictable times

MMKT, 28BB, 29BB and 30BB help provide a diversified and predictable income stream for investors who seek reliable income. And as we’ve explained in this story, these investors are by no means just retirees. Find out more about Betashares’ range of income investment ideas here.