Investing in global markets can have a risk that many investors overlook. When you buy an overseas ETF from India, do not look only at its market price.
The ETF can sometimes trade at a significant premium to its iNAV, or indicative net asset value. For example, if the underlying investment value is ₹100 but you buy the ETF at ₹150, that extra ₹50 premium can disappear even if the underlying investment value stays around ₹100. This means your investment can fall even without a major fall in the global market. Before investing in an overseas ETF, always check the iNAV and understand whether you are paying a premium. Global investing is useful, but knowing the price you are actually paying is equally important.
(What is iNAV in an ETF? Why do overseas ETFs trade at a premium? Can an ETF fall without the market falling? How to check ETF premium before investing? What should I check before buying a global ETF?)
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