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Investing in ADRs
Mar 1, 1995
American Depositary Receipts (ADRs) offer a number of attractive features to U.S.-based global investors. They trade like U.S. stocks, so that investors avoid undependable foreign settlements, costly currency conversions, and confusing tax conventions. Also, they allow investors to buy foreign securities at current market prices, whereas country funds may sell at a premium. However, they possess all of the other problems associated with buying a foreign stock rather than a U.S. stock. Exposure to currency risk, changes in foreign tax policies, and limited financial information on the foreign company are important considerations when buying an ADR.