Amid Sebi's ban on overseas ETF inflows, the spread between market price & NAV widens

livemint.com:

overseas exchange traded funds (ETFs), the gap between the trading price of units at stock markets and fund houses is getting wider. For the unversed, mutual fund ETFs are available for trading at the stock market as well, and this is why they are named as ‘exchange traded funds’. The price at which these units are sold at a stock exchange can be different from the one at which they are traded at a mutual fund house.

The price at which these units are sold at a fund house is known as the net asset value, or NAV. This price differential (between NSE’s trading price and NAV) is now getting wider because their purchase is not permitted at a fund house anymore, while their units are still being sold at the stock exchanges. ALSO READ: Sebi asks funds investing in overseas ETFs to stop taking fresh money from April Notably, fund houses are not supposed to accept fresh money for ETFs listed on foreign exchanges from April 1 onwards, according to the Sebi's order issued in March.

Mutual fund houses were barred from accepting fresh money to invest into these units because 95 percent of the $1 billion limit set by the RBI for overseas exchange traded funds (ETFs) was breached, the AMFI data revealed. The capital markets regulator Sebi has communicated the rule for ETF feeder funds to Amfi, which has informed the mutual fund houses. However, some international funds are still open for investment, and one can get the list here.