What is premium/discount to NAV?
An ETF’s NAV is declared once a day, after markets close, based on its holdings’ closing prices. Its market price, meanwhile, moves continuously during the trading session based on real buy and sell orders. Premium (or discount) to NAV is simply the percentage difference between the two: a positive number means the ETF is trading above its NAV (a premium), a negative number means it’s trading below (a discount).
Buying at a large premium means paying more than the fund’s underlying holdings are actually worth - money that doesn’t come back to you even if the fund performs well, since you’re starting from an inflated entry price. The reverse is true selling at a large discount.
Real examples: international ETFs trade at the widest premiums
CHART
Premium to NAV - 5 real ETFs, 2026-10-28
All 5 are International ETFs. A closed underlying market (US/Hong Kong markets shut during Indian trading hours) means NSE's price discovery runs ahead of the next NAV update, producing premiums this large.
Across all 353 ETFs Punji tracks with a live premium figure, 280 (about 79%) traded within ±0.5% of NAV on 2026-10-28 - the large premiums above are the exception, concentrated almost entirely in International ETFs, not a general feature of the asset class.
How to use it in practice
Check an ETF’s own page for its current premium/discount, and its 30/90/365-day median and 95th-percentile range - a tight, consistently small range signals a liquid, well-arbitraged ETF; a wide or persistently elevated range (especially for International ETFs) means the quoted price can meaningfully diverge from fair value. For most domestic equity, gold, and liquid-fund ETFs, a premium or discount beyond 1% is unusual and worth a second look before trading.
Common mistakes
Don’t read a single day’s large premium as evidence an ETF is a bad investment - for an International ETF, it’s often just a mechanical consequence of the underlying market being closed, not mispricing or poor fund management. Conversely, don’t assume a domestic ETF’s small historical premium guarantees today’s trade will execute near NAV - check the live number, not yesterday’s.
Frequently asked questions
Why do International ETFs trade at such large premiums?
Because their underlying holdings (US stocks, for example) trade on a market that’s closed during Indian trading hours. NSE’s price discovery for the ETF itself continues, but the “fair value” it’s being compared against (NAV, declared from the last available underlying prices) is effectively stale until that foreign market reopens and a fresh NAV is struck.
Is a discount worse than a premium?
Neither is inherently worse - both mean you’re trading away from fair value. A premium costs a buyer; a discount costs a seller. The practical takeaway is the same either way: check the gap before trading, regardless of direction.
How is the premium/discount I see calculated?
(Market close or live price − NAV or iNAV) ÷ NAV or iNAV × 100. Most ETF pages show it against both NAV (the last declared value) and iNAV (the exchange’s live intraday estimate) - the iNAV version is the more current reference during trading hours.
WHAT THIS MEANS FOR YOU A premium above roughly 5% is unusual outside International ETFs and worth understanding before you trade - check whether the underlying market is simply closed (normal, see above) or whether the ETF is just thinly traded (a liquidity risk worth factoring into your order type).
METHODOLOGY Premium figures and the ±0.5% distribution from Punji’s live NSE/AMFI ETF data, active rows only, as of 2026-10-28/29. Not investment advice.