NSE Cautions Investors Over Pricey Overseas ETFs

The National Stock Exchange has cautioned investors against rising risks in international exchange traded funds.
The NSE said several such funds are trading at significant premiums to their underlying net asset values. Investors are effectively buying international ETFs at elevated prices.
Premiums widened sharply in recent weeks. Some ETFs traded roughly 65 to 80 per cent above the value of their underlying holdings at points in September.
The NSE blamed supply constraints and regulatory changes. Indian mutual funds have exhausted their regulatory overseas investment limits, which has restricted the creation of fresh ETF units.
Investors buying at steep premiums may face an abrupt fall in prices, unrelated to movements in the underlying securities, the NSE warned.
Assets in mutual fund schemes investing abroad rose nearly 55 per cent year-on-year to about Rs 485 billion in August 2026.
The demand has been driven by the performance gap. Over the past year, the Nifty 50 fell about 8 per cent while the Nasdaq-100 gained roughly 24 per cent.
From April 1, 2027, ETF price bands will be linked to the previous day’s NAV.
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