3 hrs ago
SEBI Rules May Widen Premiums on Overseas ETFs, Mirae Warns
Some overseas ETFs are being bought for much more than the value of the investments they hold.
This extra amount is called a premium.
New SEBI rules may make these premiums grow even larger.
The rules use the ETF’s earlier market price to set trading limits instead of using its actual value directly.
Limits on overseas investing also make it harder for new ETF units to be created.
Normally, creating and selling units helps keep an ETF’s price close to its value.
If the premium later disappears, investors could lose money even if the overseas investments do not fall.
Mirae Asset says investors should check the live indicative NAV before buying.
It also says investors should avoid ETFs trading at a large premium.
Overseas ETFs are trading at premiums exceeding 20% over their net asset values, according to Mirae Asset.
SEBI limits overseas investments by mutual funds, restricting the creation of new ETF units by market makers.
Revised price-band rules effective September 7, 2026, use the previous day’s closing market price rather than NAV.
This mechanism could allow existing ETF premiums to compound beyond the earlier approximate 20% ceiling.
Mirae Asset advises investors to check live indicative NAVs and avoid buying ETFs at steep premiums.
- Who
- Mirae Asset Investment Managers (India) issued the advisory; SEBI’s rules affect mutual funds and overseas ETF investors.
- What
- Mirae Asset warned that revised ETF price-band rules could allow premiums over net asset value to increase.
- Where
- The rules apply to overseas ETFs traded on exchanges and to Indian mutual fund investments in overseas securities.
- When
- The revised rules took effect on September 7, 2026; investment-limit concerns had previously been flagged in January 2024.
- Why
- Investment caps restrict the creation of new ETF units, while the revised price bands are based on the previous closing market price rather than directly on NAV.
Key facts
- Current concern
- Many overseas ETFs are trading at premiums of more than 20% over NAV.
- Advising fund house
- Mirae Asset Investment Managers (India)
- Overseas investment limit
- Each Indian mutual fund house can invest up to US$1 billion, within an industry cap of US$7 billion.
- Overseas ETF limit
- Mutual funds can invest up to US$300 million per fund in overseas ETFs, within an industry limit of US$1 billion.
- Rule-change date
- September 7, 2026
- Price-band basis
- The revised mechanism uses the previous day’s closing market price rather than directly using NAV.
- Investor guidance
- Check the live indicative NAV and avoid buying units at a steep premium.
Sources
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