- Nvidia scandal impacts Indian investors holding US tech stocks via ETFs
- Mirae Asset NYSE FANG+ ETF trades at a 51% premium over its net asset value
- Motilal Oswal Nasdaq 100 ETF holds Nvidia as its largest stock at 8.36%
Nvidia's fresh troubles, aggravated by the scandal involving CEO Jensen Huang, is unlikely to be restricted to the Wall Street. They may reach Indian investors as well, who hold US tech stocks through local exchange-traded funds, and some of them paid far more than those stocks are worth.
The Mirae Asset NYSE FANG+ ETF, which holds Nvidia as one of its 10 stocks, closed at Rs 234.91 on the NSE on Monday. Its net asset value, the actual worth of the shares it holds, was Rs 155.18 as of Nov. 6, according to AMFI data. That puts the premium at about 51%.
In plain terms, every Rs 100 spent on the ETF on Monday bought roughly Rs 66 worth of US stocks.
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Where Nvidia Sits In Indian Portfolios
The NYSE FANG+ index gives equal weight to its 10 constituents, according to index provider ICE. Nvidia sits alongside Meta, Apple, Amazon, Netflix, Microsoft, Alphabet, Micron, Palantir and Broadcom. Mirae Asset's ETF tracking it managed Rs 4,447.65 crore at the last monthly count.
The Motilal Oswal Nasdaq 100 ETF is more directly tied to the chipmaker. Nvidia was its largest holding at 8.36% as of September 30, ahead of Apple at 7.38%, according to the fund house. That ETF closed at Rs 298.59 on Monday against an NAV of Rs 247.64, a premium of about 21%.
Nasdaq 100 funds run by Motilal Oswal, ICICI Prudential, Navi and Axis, according to AMFI's scheme list, also give Indian investors indirect exposure.
Why Monday's Fall May Not Be Fully Priced In Yet
Nvidia was down 5.19% at $176.96 in early US pre-market trading, at 4:33 am New York time. The slide came after its board opened an independent investigation into whether chief executive Jensen Huang was the target of a foreign intelligence effort, and Huang admitted to employees that he had been unfaithful to his wife.
Chris Weston, head of research at Pepperstone, said the timing was poor for the stock. "The market's probably telling you now this does no favours to the stock whatsoever," he told Reuters.
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For Indian ETF holders, that drop has not yet fully reached the NAV. US markets were shut during Indian trading hours, so the indicative NAV published through the day is built largely off Friday's US closing prices. If Nvidia opens lower in New York, the next NAV will reflect it.
The ETF prices themselves still slipped. Mirae Asset's FANG+ ETF (MAFANG) fell 2.70% on Monday and Motilal Oswal's Nasdaq 100 ETF (MON100) lost 1.16%, while their indicative NAVs barely moved. In other words, part of the premium simply evaporated. MAFANG's premium narrowed from about 56% at Friday's close to about 51%.
Investors pay these premiums because they have little choice. SEBI caps the mutual fund industry's overseas investments at $7 billion, and with those limits used up, fund houses cannot create new ETF units. BSE warned in September that buyers paying steep premiums risk "an abrupt fall in price, unrelated to movements in the underlying." If MAFANG's premium disappeared and its NAV held at Rs 155.18, the ETF would fall about 34%, without a single US stock moving.
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