Introduction
If you happen to’ve ever checked out an ETF just like the Mirae Asset S&P 500 High 50 ETF and questioned the way it works, you’re not alone.
I keep in mind observing my buying and selling app, confused about why an ETF monitoring US shares was shifting throughout Indian market hours.
The US inventory market is closed throughout Indian buying and selling hours, proper? So the underlying US shares aren’t buying and selling (shifting). But, the ETF’s worth on the Indian alternate retains altering. How?
It will probably really feel like a puzzle. In the present day, on this submit I’ll attempt to reply this puzzle.
I’ll begin with how these ETFs operate and why their costs transfer when US markets are closed.
I’ll additionally speak about whether or not they open doorways for arbitrage. Arbitrage means shopping for and promoting say, a ETF or a inventory, at totally different costs to make a revenue, and I’ll clarify if this US targeted ETF permits such alternatives for Indian merchants.
What Is an ETF
An Alternate-Traded Fund (ETF) is sort of a basket – very very similar to a mutual fund.
It holds a bunch of shares, bonds, or different belongings. You purchase a single unit of the ETF, and also you get publicity to all these belongings.
Consider it as ordering a thali, you get a little bit of all the pieces with out shopping for every dish individually.
The Mirae Asset S&P 500 High 50 ETF tracks the S&P 500 High 50 Index. This index consists of the highest 50 firms within the US, like Apple, Microsoft, and NVIDIA.
I believe, if you wish to deeply perceive what’s an ETF, evaluating it with mutual fund and a person inventory gives you a really clear perspective about it.
| Characteristic | Mutual Fund Scheme | Particular person Shares | ETF |
| What You Personal | Models of a fund holding a number of belongings | Direct shares of a single firm | Models of a fund monitoring an index – like mutual funds. |
| Buying and selling | Purchased/bought at NAV, finish of day | Traded on alternate, real-time | Traded on alternate, real-time (like shares) |
| Administration | Actively/passively managed | No administration, investor decides | Passively managed, tracks index – like mutual funds. |
| Diversification | Excessive, holds many belongings | Low, single firm publicity | Excessive, tracks index with many shares – like mutual funds |
| Price | Greater charges (expense ratio) | Brokerage charges solely | Decrease charges than mutual funds – like index funds. |
| Liquidity | Restricted, depends upon fund home | Excessive, depends upon inventory quantity | Excessive, depends upon alternate quantity – like shares, |
So you may see, an ETF is usually like a mutual fund however with some good qualities of shares as nicely.
Why Does the US ETF Value Transfer Throughout Indian Hours?
That is the place issues get fascinating.
The US inventory market opens solely within the night IST.
So, once we’re buying and selling in India through the day, these US shares aren’t buying and selling (not shifting). Why? As a result of at our buying and selling hours, the inventory market within the US is closed.
But, the ETF’s worth on the NSE retains fluctuating, even throughout Indian buying and selling hours. Why? That is the primary query.
It is because of native market dynamics. Let me clarify.
The value of such US targeted ETF’s worth in India can change on account of provide and demand. Throughout Indian buying and selling hours, Indian traders are shopping for and promoting these ETF models, proper?
Their sentiment, expectations, and even the INR/USD alternate price play a task. If extra folks wish to purchase than promote, the value goes up. If sellers dominate, it dips.
This creates a niche. What GAP?
The hole is the distinction between the ETF’s buying and selling worth on the Indian inventory alternate (like NSE) and its NAV.
- The NAV is the precise worth of the underlying US shares held by the ETF. It’s calculated based mostly on their closing costs within the US market, adjusted for the INR/USD alternate price.
- Throughout Indian buying and selling hours, when US markets are closed, the ETF’s worth in India is fluctuate. Why? Resulting from native demand, provide, and investor sentiment. This could push the ETF’s worth increased (premium) or decrease (low cost) than the precise NAV of the fund.
That is how the hole between the precise NAV and the ETF’s worth will get created.
When You Purchase the ETF Models, Are You Actually Shopping for the US Shares?
It’s a frequent query: Once you purchase this ETF, do you personal shares of Apple or Microsoft?
Probably not. You’re shopping for models of the ETF. The fund itself holds these US shares. You get oblique publicity to them.
It’s identical like shopping for a mutual fund models.
An investor buys solely the models of mutual fund scheme. The mutual fund holds a basket of shares in its portfolio. What unit holders personal are solely models and never the shares.
It’s identical like shopping for shares of an organization. What shareholders personal are solely shares (proper to a share in firm’s income). They don’t personal the belongings of the corporate like land, constructing, machines, stock, and so forth. Sure, a majority shareholder can have totally different type of rights.
ETFs commerce on the inventory alternate like common shares. You should buy or promote them anytime throughout market hours. This makes them versatile.
However you don’t straight personal the underlying shares. The ETF’s managers deal with that for you.
For instance, as of August 2025, the Mirae Asset S&P 500 High 50 ETF has the next holding patters:
- NVIDIA at 12.08%,
- Microsoft at 11.59%, and
- Apple at 9.61% as its high holdings.
The Liquidity Query – Why No Sellers in ETF?
Let’s speak about one thing particular to this ETF. An individual requested this on reddit.
On August 7, 2025, the Mirae Asset S&P 500 High 50 ETF was buying and selling at Rs.62.55 on the NSE. The quantity was round 663,700 shares. Not dangerous, however not large both.
Some traders complain about low liquidity. They see no sellers or a large bid-ask unfold.
What was occurring? Liquidity depends upon market makers and retail participation.
- Market makers are like shopkeepers. They guarantee there’s at all times somebody to purchase or promote from. However for worldwide ETFs in India, market maker exercise will be low.
- Retail traders may also shrink back in the event that they don’t perceive the ETF nicely.
This could result in an order e book imbalance.
A broad bid-ask unfold means the distinction between what patrons supply (purchase worth) and sellers ask (ask worth) is excessive.
It’s like bargaining at a market stall with no center floor.
Keep in mind, an ETF’s liquidity will be low if solely few persons are buying and selling it or market makers aren’t lively. This could result in fewer patrons or sellers. This doesn’t imply you may’t purchase or promote. It solely signifies that it would take longer time to get the commerce executed.
If you wish to get the commerce accomplished rapidly, attempt inserting the restrict order nearer to the final traded worth.
The Arbitrage Alternative – As a result of Hole
What’s the hole? Learn it once more right here after which proceed studying.
Now, let’s deal with this massive query. Once more, I received this follow-up question from the identical reddit consumer.
Does this premium or low cost create arbitrage alternatives? Completely, it could possibly.
Arbitrage is like recognizing a deal at two totally different shops. It occurs whenever you purchase one thing at a lower cost in a single place and promote it at the next worth elsewhere to make a revenue. For instance, you might purchase an iPhone for Rs.100,000 on Amazon and promote it for Rs.105,000 on Flipkart. The Rs.5,000 distinction is your revenue, however prices like transport or taxes would possibly scale back it.
So how arbitrage alternative will get created in an ETF like “Mirae Asset S&P 500 High 50?”
If the ETF’s worth in India is increased than the worth of its US shares, you might promote the ETF and purchase the shares (or their futures) within the US market.
When the costs align, you pocket the distinction.
Sounds easy, proper? However its more durable than it sounds.
Arbitrage isn’t a free lunch. Transaction prices eat into income. You’re paying brokerage charges, taxes, and possibly forex conversion expenses.
The INR/USD alternate price also can swing unexpectedly. Plus, low liquidity within the Indian market makes it difficult to execute trades easily.
Skilled merchants with high-speed techniques and deep pockets typically dominate arbitrage. For retail traders like us, it’s more durable.
However the chance exists, particularly throughout unstable Indian buying and selling hours.
Ideas for Buying and selling This ETF
Listed here are a couple of tips to navigate this ETF higher:
- Test the NAV: Evaluate the ETF’s worth to its NAV on the fund’s web site. This helps spot premiums or reductions.
- Watch the Unfold: A large bid-ask unfold indicators low liquidity. Use restrict orders to keep away from overpaying.
- Observe Forex Actions: INR/USD fluctuations affect your returns. Keep up to date.
- Time Your Trades: Costs will be unstable throughout Indian hours. Buying and selling nearer to US market opening would possibly align costs higher.
Conclusion
I’ve at all times believed diversification is vital.
The Mirae Asset S&P 500 High 50 ETF presents a strong technique to faucet into US markets with out the effort of opening a international buying and selling account.
However it’s not excellent. Low liquidity and forex dangers will be annoying.
Nonetheless, if you happen to’re affected person and strategic, it’s an awesome device for long-term wealth creation by way of portfolio diversification.
What do you assume? Are you prepared so as to add some international aptitude to your portfolio? Or does the thought of monitoring NAVs and spreads really feel like an excessive amount of work? Drop your ideas within the feedback.
Have a cheerful investing.
