There is a huge difference between Most Nasdaq 100 ETF NAV being quoted in its website and the traded price in NSE.
NAV (on 02 May 2022) - 96.0132
Average Traded Price in NSE (on 02 May 2022) - 107.05.
The traded volume is 4.3 lakh. Why is such a considerable sized traded volume ETF being so highly mis-priced?
Its mainly because MFs have reached foreign investment limits and are unable invest more US$ to create more units.
And there is a demand for these ETFs, so it is trading at premium
Now, Nasdaq has underperformed quite a lot, but we are not able to invest in MON100 ETF or FOF.
What is the option available to invest in Nasdaq now ?
When can we expect SEBI to relax these curbs ?
Limit is set by RBI. Nobody knows when it will be relaxed.
Entire MF industry is waiting for relaxation.
But there is a separate limit of 1 billion dollars for foreign ETFs. This limit has not been breached yet; So there should be no problem in creating these units.
As far as I understand, there are various limits and sub-limits for fund house as well as overall limit for all MFs.
This is what Prateek Oswal of MO had to say:
“We have stopped market making. There is no fresh creation of units, due to the regulatory restrictions,” said Pratik Oswal, head of passive funds business at Motilal Oswal AMC. “There is a premium as prices are dependent on pure demand and supply.”
So new units are not getting created and market making is not happening.
Read more at:
@Nagendran_Krish @sriramnpkt
I think you can invest through ‘Navi Nasdaq 100 FoF’. Looks like it is following the U.S. markets correctly and allowing investment also as of now.
@Akash_Shah Any idea how come Navi’s fund tracking its NAV closely and also allowing Investing option.
It is a Fund of Fund not an ETF.
Since FOF are bought and sold with fund house at end of day NAV, it does not face issue of trading above NAV like ETFs
No but the following are also ‘FoF’. Then how come they are not following NAV. (Compare their fall on 5th may to Navi’s, they have fallen just -1.6% and the other just -0.39%, while Navi has fallen -5.12%, which is inline to Nasdaq 100 fall in U.S. matkets).
Well I don’t know the exact reason for each fund deviating. But as I said previously, there are various limits and sublimits on foreign investments.
One of the limit is at fund house level. So that can also be one reason.
Beside each fund has different methodology of investment and different tracking error. And especially on such volatile days, it becomes glaring.
Do you know the TOTAL expense ratio of this FoF?
An FoF invests in another fund which has its own expense ratio, correct?
