{
  "id": 13121434,
  "title": "Price vs Value: Don’t pay extra to invest overseas",
  "url": "https://urgent.news/2026/10/09/price-vs-value-dont-pay-extra-to-invest-overseas",
  "topic": "finance",
  "section": "Finance & Markets",
  "published": "2026-10-09T13:01:47.000Z",
  "source": {
    "name": "Hindu BusinessLine",
    "slug": "hindu-businessline",
    "url": "https://www.thehindubusinessline.com/markets/price-vs-value-dont-pay-extra-to-invest-overseas/article71564040.ece"
  },
  "original_language": "en",
  "account": "Several overseas exchange-traded funds (ETFs) are trading at prices significantly higher than their net asset values (NAVs), which exposes investors to potential losses unrelated to the performance of the underlying assets. The Motilal Oswal Nasdaq Q 50 ETF serves as a prime example, where its units closed at ₹246 on the BSE, while the reported NAV was ₹120.05. This means investors were paying more than double the value of the ETF's assets, a premium that is difficult to justify regardless of the overseas market's prospects.\n\nUnder normal circumstances, the difference between an ETF's NAV and its market price is minimal, as market makers can create or redeem units to neutralize any price discrepancies. However, this mechanism has been disrupted for many international ETFs due to India's limited investment capacity in these funds. With the creation of fresh units constrained, investor demand has driven exchange prices well above NAV. This situation arises because supply is limited, prompting higher demand, which pushes exchange prices up.\n\nWhile the scarcity of ETF units may not necessarily indicate an increase in the value of the underlying investments, it does present two separate risks. The first pertains to the movement of overseas securities, and the second to the possibility that the premium itself may disappear. Consequently, investors could incur losses even if the overseas market remains unchanged. For instance, if the ETF's NAV rises while its market price falls once the premium contracts significantly.\n\nDespite the attractive prospect of a substantial premium, investors should be cautious about purchasing ETF units solely for their exposure to overseas markets. This practice could lead to paying more than the asset's worth. It is advisable to wait for a more reasonable entry price or explore alternative investment strategies. SEBI has introduced measures, such as revised price-band mechanisms effective from April 1, 2027, to mitigate such issues, but these safeguards are primarily intended for addressing liquidity problems rather than enabling arbitrage opportunities. Investors should also consider factors like trading liquidity, bid-ask spreads, and the ability to create fresh units when evaluating ETFs.",
  "summary": "Several overseas ETFs are trading far above their NAVs, leaving investors vulnerable if premiums narrow or disappear",
  "key_points": [
    "Overseas ETFs trading at 2x their NAV, exposing investors to unnecessary losses.",
    "Limited creation of fresh units due to India's restricted investment capacity.",
    "Investors may face losses if premium disappears, despite unchanged overseas market."
  ],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}