Definition
International ETF
An international ETF gives Indian investors exposure to overseas markets or indices, such as the Nasdaq 100 or S&P 500, by holding foreign securities or feeding into an overseas fund.
Indian international ETFs let domestic investors diversify beyond local markets and gain rupee-denominated access to global equities. Because the underlying foreign markets trade in different time zones, the ETF's iNAV can be stale during Indian hours, sometimes causing wide premiums or discounts to NAV.
A further constraint is the RBI/SEBI industry limit on overseas investment, which has at times forced AMCs to suspend fresh subscriptions, widening premiums when demand outstrips the capped capacity. Investors should watch the premium/discount and any inflow restrictions closely before buying international ETFs on-screen.
Related terms
- iNAV DisseminationiNAV dissemination is the publishing of an ETF's indicative net asset value at frequent intervals during the trading day, via the exchange and the AMC, so investors and arbitrageurs can see fair value in real time.
- Premium/Discount to NAVAn ETF trades at a premium when its market price is above its net asset value and at a discount when below, reflecting temporary imbalances between on-screen supply and demand and fair value.
- Fund of Funds ETFA fund of funds (FoF) is a mutual fund scheme that invests in units of other funds or ETFs rather than directly in securities, often used in India to give domestic investors access to ETFs without a demat account.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.