Published on: August 10, 2025
Author: Subhash Rukade.
Introduction – The ETF Puzzle 🧩
If you’ve been investing in international ETFs lately, you may have noticed something strange — the market price is often higher than the actual underlying value of the fund’s assets.
That difference? It’s called a premium — and in 2025, it’s more noticeable than ever for Indian and even some U.S. investors. 📊
Whether you’re in New York trading NASDAQ ETFs or in Mumbai checking the Mirae Asset FANG+ ETF, understanding iNAV (Indicative Net Asset Value) is the key to avoiding expensive mistakes.
In this guide, you’ll learn:
✅ What ETFs are & how they work
✅ How international ETFs differ from domestic ones
✅ What iNAV means and why it matters
✅ Why premiums exist — especially in India in 2025
✅ How to invest smartly without overpaying
✅ Actionable tips for both U.S. & Indian investors
ETFs 101 – The Basics 📚
An Exchange-Traded Fund (ETF) is like a basket of investments — it could hold stocks, bonds, commodities, or even a mix of them.
Key Features of ETFs:
Trades like a stock 📈 – You can buy/sell them on stock exchanges throughout the day.
Tracks an index – e.g., S&P 500 ETF follows the S&P 500 index.
Low cost 💰 – Usually cheaper than actively managed mutual funds.
Transparent holdings – Most ETFs disclose their portfolio daily.
Example:
A Nifty 50 ETF in India will hold the same 50 companies in the Nifty 50 index.
An S&P 500 ETF in the U.S. will hold the same 500 companies in that index.
International ETFs – How They Work 🌍
International ETFs give investors access to global markets without having to open foreign brokerage accounts.
Two types:
1. U.S.-listed international ETFs – For U.S. investors wanting exposure to markets like India, China, or Europe.
2. India-listed international ETFs – For Indian investors wanting exposure to markets like the U.S. (NASDAQ 100, S&P 500, Dow Jones).
How They’re Built:
The ETF manager buys actual foreign stocks or uses a feeder fund structure.
Units of the ETF are created and traded on the local stock exchange.
What is iNAV? 🤔
iNAV (Indicative Net Asset Value) is the real-time estimate of an ETF’s value based on its underlying assets.
Updated every 15 seconds during trading hours.
Calculated using current market prices of all the ETF’s holdings.
Published by the ETF provider and stock exchanges.
💡 Think of iNAV as the “true worth” of the ETF at any given moment.
Example:
If an ETF holds tech stocks like Apple, Amazon, and Google — iNAV changes instantly when those stock prices move.
India 2025 – The Premium Problem 📈🔥
In April 2025, data showed several Indian international ETFs trading 10%–23% above their iNAV:
ETF Name iNAV Price Premium %
Mirae Asset FANG+ ₹91.08 ₹112.50 23.52%
Mahatech ₹17.92 ₹21.32 18.97%
SOM100 ₹148.11 ₹165.99 12.07%
HNGSNG BeES ₹325.01 ₹376.96 15.98%
MONQ50 ₹61.29 ₹67.51 10.15%
Why Are Premiums So High? 📊
1. RBI’s Foreign Investment Cap 🏦
The Reserve Bank of India has capped the mutual fund industry’s foreign investments at $7 billion.
Each AMC (Asset Management Company) can invest up to $1 billion abroad.
Since early 2022, many AMCs have hit the limit and stopped creating new ETF units.
Result:
Supply is frozen, but demand keeps rising → Prices go above iNAV.
2. Supply-Demand Imbalance ⚖️
No new units = fixed supply.
More Indian investors want global exposure.
Limited availability pushes prices up.
3. Investor Psychology 🧠
FOMO (Fear of Missing Out) 😱 — People rush to buy without checking iNAV.
Belief that “premium will always stay high” — which isn’t guaranteed.
U.S. Market Perspective 🇺🇸
In the U.S., ETF premiums this large are rare because:
There’s no foreign investment cap like India.
ETF creation/redemption keeps prices close to iNAV.
However, small niche ETFs or those tracking illiquid assets (like frontier markets) can still trade at premiums/discounts.
The Hidden Risk of Paying a Premium ⚠️
Imagine you buy the Mirae Asset FANG+ ETF at ₹112.50 when iNAV is ₹91.08 — that’s a 23.5% premium.
Even if the underlying stocks rise 10%, your gain will be smaller because you overpaid.
If the premium falls (say from 23% to 10%), you could lose money even if the ETF’s holdings went up!
Smart Investor Strategies 🧠💡
1. Always check iNAV before buying (available on AMC’s website or NSE/BSE).
2. Consider mutual funds still accepting foreign investments.
3. Wait for premiums to cool down before entering.
4. Diversify across geographies using U.S.-listed ETFs if you can access them.
5. Avoid chasing hot themes just because of recent performance.
Final Takeaways 📌
Premiums are a market signal, not free profit.
iNAV is your best friend for ETF valuation.
In India, premiums may last until RBI relaxes limits.
In the U.S., premiums are rare but can appear in niche ETFs.
FAQs ❓
Q: Can a premium turn into a discount?
Yes, if supply increases or demand drops, ETF prices can fall below iNAV.
Q: Where do I find iNAV?
On the AMC’s official site, NSE/BSE, or your brokerage platform.
Q: Should I ever buy at a premium?
Only if you strongly believe the premium will stay or rise — but it’s risky.