- Published 2026.10.12 09:43
Price gaps widen for three locally listed funds including S&P 500 ETF
Premium could vanish if rules ease; direct investing emerges as alternative
Mirae Asset's overseas exchange-traded funds (ETFs) listed on the Indian stock market are trading at prices up to more than 80% above their net asset value (NAV), raising concerns in the market. As local regulations exhausted the overseas investment limit and halted new ETF issuance, demand for global equity exposure flooded the secondary market, creating a distorted premium.
According to an analysis by The Hindu BusinessLine on Oct. 11, Mirae Asset's three India-listed overseas ETFs traded at an average premium of 24% to 49% over NAV during the past 21 trading sessions. The report, published on Oct. 10, was based on data compiled from the National Stock Exchange of India (NSE), the Bombay Stock Exchange (BSE) and Bloomberg.
Specifically, the Mirae Asset S&P 500 Top 50 ETF posted an average premium of 49% over the past 21 trading sessions, surging as high as 83%. The Mirae Asset NYSE FANG+ ETF and the Mirae Asset Hang Seng TECH ETF recorded average premiums of 35% and 24%, respectively.
The combined trading value of the six India-listed overseas ETFs included in the analysis reached 1.044 trillion rupees this year. Of that, about 30%, or 309.4 billion rupees, was traded at prices above NAV. With 2.53 million trades executed in just the past 21 sessions, market watchers say short-term speculative money has flooded in.
The root cause lies in the strict capital outflow regulations of the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI). Indian financial authorities currently cap the mutual fund industry's total overseas investment limit at $7 billion and the overseas ETF limit at $1 billion. As Indian investors' demand for global exposure, including U.S. equities, has grown, the limits were exhausted early, leaving asset managers unable to issue new ETF shares by adding overseas assets. With supply frozen and trading limited to existing listed shares, market prices have become detached from actual asset values.
The price distortion is not unique to Mirae Asset. Other local asset managers' products show even more severe gaps. The Motilal Oswal Nasdaq Q50 ETF posted an average premium of 93% and a record high of 235%. The Motilal Oswal Nasdaq 100 ETF and the Nippon India ETF Hang Seng BeES showed premiums of 17% and 3%, respectively, with wide variations depending on the product and underlying index.
The current abnormal premium is unrelated to the funds' own performance or management capabilities. Buying an ETF at a price above its NAV could lead to massive capital losses down the road.
For example, if an investor buys an ETF holding overseas assets worth 100 rupees for 150 rupees, they have already paid an extra 50% in costs. Even if the U.S. market moves sideways or rises, if Indian authorities raise the overseas investment limit and new ETF supply hits the market, the premium will evaporate instantly. In that case, the ETF's market price would converge toward its NAV, leaving investors who bought at the peak with heavy losses.
As an alternative to avoid extreme price distortions, direct investment through the Liberalised Remittance Scheme (LRS) is being discussed. Indian residents can remit up to $250,000 per year overseas through the LRS. Instead of paying a premium for overseas ETFs listed on the Indian stock market, investors can buy U.S.-listed ETFs directly through global investment platforms and gain exposure to global markets without any premium.
Whether the excessive premium resolves depends on policy changes by Indian financial authorities. In addition to declines in the value of underlying assets in portfolios, whether and when Indian regulators increase the overseas investment limit will be key indicators for investment performance. Meanwhile, Mirae Asset has not issued an official statement on the background of the premium or its future response plans.
※ This article is an AI translation of the Korean original published by Korea Credit News; it was checked by automated quality guards and published by the English edition desk.
