Are current prices of global ETFs setting you for failure?

Summary: Global ETFs have opened a gateway to invest beyond Indian borders. But what happens when that gateway starts charging a premium? Many of these funds are now trading well above their fair value and history shows that they can change the math in unexpected ways. Would you pay Rs 1.17 for a rupee’s worth of stock? That is, in effect, what many investors are doing when they buy global exchange-traded funds (ETFs) listed in India. These funds are designed to mirror foreign indices, yet several now trade well above the value of their underlying portfolios, known as indicative net asset value (iNAV). The gap is striking. On a recent day, the Nippon India ETF Hang Seng BeES had an iNAV of Rs 449 but traded at Rs 537, a premium of almost 20 per cent. For an instrument built to track an index, that is a wide divergence. Under normal circumstances, an ETF’s market price and iNAV move almost in lockstep. When prices rise above the fund’s actual value, authorised participants create new units and sell them, restoring alignment. But this mechanism broke down once fund houses hit SEBI’s US$7 billion overseas-investment ceiling, which froze new unit creation. With supply capped, prices began to reflect scarcity rather than fundamentals. A costly affair Fuelled by higher demand, all global ETFs are trading at a premium ETF NAV (Rs) Closing Price (Rs) Premium (%) Mirae Asset NYSE FANG+ ETF 142 169 19.6 Mirae Asset S&P 500 Top 50 ETF 58 69 19.4 Motilal Oswal Nasdaq Q50 ETF 87 102 17.8 Motilal Oswal Nasdaq 100 ETF 217 241 11.2 Mirae Asset Hang Seng Tech ETF 25 30 18.8 Nippon India Hang Seng BeES 449 537 19.6 Data as of Oct 6, 2025 These premiums are not isolated spikes; they appear across almost every global ETF available in the market. With new supply constrained and investor appetite for global exposure still strong, prices have drifted far from their intrinsic value. A small premium can be justified in a market where access is limited. But when ETFs built to track indices start trading like scarce stocks, the qu