This ETF income portfolio delivered 7.8% and beat its yield target. Here's how

A year ago, as part of Livewire's Income Series, we challenged ETF providers to build a diversified income portfolio using funds they've listed on the ASX.

The brief was straightforward: generate attractive income without taking excessive risk. 

Betashares responded with a 10-ETF portfolio targeting a gross yield of 5.5% per annum, including franking credits, using a 70/30 split between growth and defensive assets. The portfolio blended Australian and global equity income strategies with a diversified allocation to hybrids, subordinated debt and investment-grade credit.

Between 30 June 2025 and 1 June 2026, the portfolio generated a gross yield of 6.3%  including franking credits - exceeding its income objective - alongside a total return of 7.8% (or a gross total return of 8.3% when franking is added). It was the best performing portfolio from our ETF income portfolio challenge, both in terms of income and total returns.

For an investor who allocated $100,000 at inception, the result would have equated to approximately:

• $5,752 in cash distributions
• $573 in franking credits
• $2,019 in capital growth

So what worked, what surprised portfolio architect Cameron Gleeson, Senior Investment Strategist at Betashares, and what refinements would he make to the portfolio today?

Income did the heavy lifting

While equity markets delivered respectable gains over the period, most of the portfolio's return came from the outcome it was specifically designed to produce: income.

Of the portfolio's 8.3% gross total return:

• 5.8 percentage points came from cash distributions
• 0.6 percentage points came from franking credits
• 2.0 percentage points came from capital growth

Importantly, every ETF in the portfolio delivered a positive total return over the period.

"We aimed to meet this objective using a 70/30 growth/defensive asset allocation that could provide a combination of yield from diverse sources as well as capital growth from equities," Gleeson says.

"The equity ETFs had gross yield of between 6.2%-9.9%, and the fixed income ETFs all had yields that were well above RBA cash. So, it was a team effort among the funds in the portfolio."

Rather than relying on one or two standout performers, all 10 ETFs contributed positively, with both the equity and fixed income allocations generating cash flows.

The star performer was also the least conventional

The portfolio's biggest winner wasn't one of its traditional dividend funds.

Instead, that honour went to the Betashares Global Royalty ETF (ASX: ROYL).

"Special mention must go to ROYL, which returned an impressive 27.9% over the period. ROYL provides exposure to a portfolio of global companies and benefited from strong tailwinds across its three key segments – precious metals, energy and semiconductors," Gleeson says.

The portfolio's global equity exposures also proved valuable. With international markets outperforming Australian shares over much of the period, the allocation to overseas income strategies provided both diversification and performance support.

Despite the strong run, Gleeson says he has no plans to trim ROYL from the portfolio.

He argues that several of the structural drivers underpinning the strategy remain firmly in place including geopolitical tensions and a renewed focus on supply chain resilience.

"Building supply chain resilience requires more spending on energy generation and storage, while increased defence spending means greater demand for commodities and potentially a structurally higher interest rate environment," he says.

"This could be a positive for commodity-related exposures, and commodity royalties specifically."

ROYL also retains exposure to the ongoing buildout of AI infrastructure. Among its holdings is chip designer Arm Holdings, which Gleeson believes is well placed to benefit from continued capital expenditure across the AI ecosystem.

The biggest surprise

Betashares S&P Global High Dividend Aristocrats ETF (ASX: INCM) returned 12.84%, and this was the biggest surprise for Gleeson.

The ETF focuses on companies that have increased or maintained their dividends for at least ten consecutive years - a strategy that would appear disadvantaged in a market increasingly dominated by technology giants and semiconductor stocks.

Yet despite being structurally underweight the information technology sector, INCM outperformed broader global benchmarks.

"INCM's strategy focuses on stocks that have increased or maintained their dividends every year for at least the last ten years," Gleeson says.

"INCM outperformed global benchmarks despite being underweight the IT sector in a year when semiconductor stocks and hyperscalers have led the market higher."

Instead, strong returns from financials, effective stock selection within healthcare and a larger allocation to energy helped close the gap. Gleeson also notes that INCM experienced a materially lower drawdown during the market volatility of early 2026.

Two changes for the year ahead

While the portfolio delivered on its objectives, Gleeson says two newer additions to the Betashares range would earn a place if he were constructing the portfolio today.

The first is the Betashares S&P Australian Shares High Yield ETF (ASX: HYLD), which launched in August 2025. Unlike most ASX-listed ETFs, which distribute income quarterly, semi-annually or annually, HYLD makes monthly distributions, offering investors a more regular stream of cash flow.

HYLD replaces the Betashares Australian Dividend Harvester Fund (ASX: HVST) in the portfolio.

According to Gleeson, HYLD offers attractive risk-adjusted returns, incorporates screening designed to avoid potential dividend traps and comes with a relatively low management fee of 0.25% per annum.

The second change would be replacing the Betashares Interest Rate Hedged Australian Investment Grade Corporate Bond ETF (ASX: HCRD) with the newer Betashares Australian Enhanced Credit Income Complex ETF (ASX: ECRD).

Launched in November 2025, ECRD currently offers a running yield of approximately 8% per annum and increases exposure to high-quality Australian investment-grade credit.

"ECRD does use gearing to boost the yield potential, but in the current market the risk-return trade-off of increasing exposure to high-quality Australian investment-grade credit is appealing," Gleeson says.

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