Some ETFs Trade 20% Above NAV as Creation Limits Tighten
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- Bharath Rathore of Anand Rathi Wealth said Nifty 50 ETFs are trading within a narrow 0.1% to 0.6% discount to their NAV (NSE data, prices as of July 23 and NAV as of July 22, 2026), reflecting efficient pricing.
- International ETFs are quoting 8% to 20% above their NAV because fresh unit creation has been restricted after overseas investment limits were exhausted, even as investor demand remained strong, per Rathore.
- Sectoral and silver ETFs show the widest discounts, driven by lower liquidity, speculative trading and sharp moves in metal prices that temporarily widen the gap between market price and NAV, according to Rathore.
- Rathore cautioned that buying an ETF at a significant premium can reduce future returns even if the underlying assets perform well, recommending that international ETFs make up only 5% to 10% of an overall portfolio.
- Nilesh D Naik of PhonePe Mutual Fund told investors to compare market price with the indicative NAV (iNAV) — which updates in near real time — and flagged gaps of more than about 50 basis points as a potential concern for buyers and sellers.
Why it matters: Investors piling into international ETFs at 8–20% above NAV are paying a premium that Rathore says can vanish once supply normalizes, directly eroding future returns even when the underlying portfolio performs; his 5–10% portfolio cap flags the category as a satellite bet rather than a core holding.
