ETF market price vs NAV: Why some funds trade at a 20% premium while others stay close to fair value?

Most domestic ETFs trade close to NAV, while some international ETFs trade at steep premiums due to supply constraints.

NAV is the per-unit value of securities held by the ETF, calculated by the fund house; market price is determined by demand and supply on the exchange.

Widest discounts are seen in sectoral and silver ETFs (e.g., Tata Nifty India Digital Exchange Traded Fund at -1.95%, Groww Nifty Realty ETF at -1.88%) due to lower liquidity, speculative trading, and sharp metal price movements.

Almost all Nifty 50 ETFs trade within a narrow 0.1% to 0.6% discount to NAV, reflecting efficient pricing.

Experts advise comparing an ETF's market price with its NAV or iNAV to avoid overpaying.