Core Insights - The ongoing regulatory restrictions on overseas mutual fund investments have led to a significant premium on overseas ETFs, distorting their market prices compared to their net asset values (NAV) [1][18] - High demand for a limited number of overseas ETFs has resulted in prices that exceed their actual value, creating a gap between the indicative NAV (iNAV) and market price [1][18] - Investors are currently paying hefty premiums for ETFs, which may lead to potential losses if the premium diminishes over time [11][19] ETF Market Dynamics - Most global mutual fund schemes remain closed for fresh inflows, including overseas ETFs, which cannot create new units to meet demand [1][18] - The Mirae Asset FANG+ ETF was trading at a premium of over 21% to its NAV, indicating that investors are overpaying for these ETFs [5][18] - The price distortion in ETFs is also affecting fund-of-funds (FoFs), which are valued based on the ETF's closing price rather than its NAV [7][8] Performance Discrepancies - Over the past year, the Mirae Asset NYSE FANG+ ETF gained 37.6%, while its FoF variant gained 68.8%, highlighting a significant gap in returns [8][9] - The valuation of FoFs based on inflated ETF prices provides an inaccurate picture of performance, which could lead to misleading returns for investors [9][10] Investor Considerations - Investors are advised to avoid overpaying for ETFs, as the premium may not be sustainable and could lead to capital losses [14][20] - The Reserve Bank of India's restrictions on overseas investments are pushing investors towards ETFs, but this may not be a favorable long-term strategy [13][14] - Experts recommend that investors assess whether an ETF is trading close to its iNAV before making investment decisions [14][20]