The global AI boom has created trillion-dollar tech giants and dramatic market swings — from Nvidia’s record-breaking rally to Oracle’s sharp correction and OpenAI’s soaring valuation despite governance chaos. But beneath the excitement, a far quieter threat is building for Indian investors, warns chartered accountant and market analyst CA Nitin Kaushik.
In a recent post on X, Kaushik said that the “Global + AI” hype cycle is driving investors into international ETFs that are trading far above their actual value.
“Sometimes the hottest trend hides the coldest truth,” he wrote, calling the situation a “big wake-up call” for investors chasing the AI wave without checking fundamentals.
How the problem started: Demand surged but supply froze
Kaushik noted that the root of the issue lies not in global markets, but in India.
In 2022, the RBI restricted how much Indian mutual funds could invest overseas, effectively freezing the creation of new international ETF units.
But as global tech and AI narratives heated up, demand for these ETFs skyrocketed.
The result? A textbook scarcity premium.
Kaushik compared the situation to “a movie theatre with 100 seats and 1,000 people wanting to watch the blockbuster.”
Global ETFs are trading at inflated premiums
Because new units can’t be issued, ETF prices on the market have drifted far above their iNAV — the real value of the underlying stocks.
Revised premium estimates shared by Kaushik include:
- FANG-themed ETF: ~18% premium
- S&P 500-based ETF: ~16% premium
- NASDAQ-focused ETF: ~9–10% premium
- China/Hong Kong ETF: 15%+ premium
“Investors aren’t buying value,” Kaushik warned. “They’re buying emotionally inflated prices.”
Why this is a financial risk
Kaushik said buying an ETF at a premium is like paying surge pricing for a flight — the real pain comes later.
Even if global tech stocks rise, a shrinking premium can silently erase investor returns.
He pointed to past examples in commodity ETFs, such as silver, where premiums “evaporated in a week,” despite underlying prices barely moving.
“Premiums don’t collapse slowly,” he said. “They burst.”
The simple test before buying any global ETF
Kaushik stressed that the AI boom itself isn’t the problem — overpaying is.
Before investing in any international ETF, he urged buyers to ask a single question:
“Is it trading close to its iNAV today?”
Smart investing, he emphasised, isn’t about forecasting AI’s future.
“It’s about avoiding predictable mistakes. As AI themes continue booming, data — not emotion — will protect wealth.”
