The National Stock Exchange has cautioned investors against buying international exchange-traded funds at steep premiums to their underlying value.

The NSE said on Wednesday that several international ETFs were trading at significant premiums to their net asset values, meaning investors were effectively buying overseas securities at inflated prices. According to Reuters, some ETFs traded roughly 65 to 80 per cent above the value of their underlying holdings at various points in September.

The exchange attributed the gap to supply constraints. Indian mutual funds have exhausted their regulatory overseas investment limits, which restricts the creation of fresh ETF units. Price bands for ETFs will be linked to the previous day's NAV from April 1, 2027.

The NSE urged investors to check NAVs on the exchange or AMFI platforms before placing orders. AMFI data shows assets in overseas-investing mutual fund schemes rose nearly 55 per cent year-on-year to about Rs 485 billion in August. The BSE had issued a similar warning on September 25.