Investors should check ETF premiums before buying international funds
· Business · Business Standard
Business Standard advises investors to verify the premium before purchasing international Exchange Traded Funds. A premium occurs when the ETF's market price exceeds its net asset value, potentially reducing returns. The article underscores that overlooking this factor can lead to overpaying for exposure to foreign markets. Investors are urged to compare the market price with the underlying asset value to ensure cost-effective investment. The guidance comes amid growing interest in overseas diversification through ETFs.
Why it matters
Indian retail investors allocating capital to overseas markets face the risk of paying inflated prices if ETF premiums are ignored, directly impacting their net returns. Checking the premium ensures that the investment vehicle is purchased at a fair value, protecting the portfolio from hidden cost erosion. This is particularly relevant as more investors seek geographic diversification beyond domestic equities.
Read the original report — Business Standard
Join us on Telegram
Breaking news the moment it lands. At 10,000 members we ship the Android app.