adr.com
by CI Staff
It should come as no surprise that international investing is beneficial to the portfolios of individual investors. Modern portfolio theory tells us that there is an efficient frontier, which plots the highest return investors should be able to achieve at each level of risk. Theoretically, international investments expand the efficient frontier further than domestic-only holdings do. This means investors are effectively able to generate higher returns at each level of risk or bear less risk for a given return.
While it is often difficult for individuals to invest directly overseas, there are other methods of gaining international exposure. Of course, you can always put money in a mutual fund or ETF, but you can also maintain more control over the selection of individual holdings by using American depositary receipts (ADRs). An ADR is a security that represents securities of a foreign company and trades on the U.S. financial markets. These shares are traded in the same way as U.S. shares, but firms offering ADRs are subject to additional rules and regulations pertaining to being listed on a U.S. stock exchange, a benefit for investors seeking exposure to countries with looser standards. Likewise, there are global depositary receipts, which serve the same purpose as ADRs but trade on non-U.S. exchanges. The combined universe (American depositary receipts and global depositary receipts) is known simply as depositary receipts (DRs).
adr.com is a J.P. Morgan website built to provide investors with information on DRs. The data presented is very robust, making adr.com one of the most comprehensive DR resources available on the Web. Entering the name of a company in the search box at the top right of the home page enables you to navigate to a summary page of the DR with data such as the current price, the exchange the DR trades on, the ratio (number of underlying shares each DR represents), and the depositary (bank). Furthermore, tabs for news and events, charts, fundamentals, earnings, ownership and corporate actions are all provided.
The website also enables you to search from a universe of over 3,400 DRs based on your personal circumstance or interest. The DR Search area allows users to sort DRs by region, country, exchange and section. Furthermore, you are able to specify DR type and depositary.
An education and guidance section is also provided for users new to DRs. In addition, the library section offers links to outside reference materials and commentary and reports.
Overall, adr.com is a very useful site for investors seeking to gain international exposure without investing directly or using mutual funds or ETFs. Depositary receipts are often subject to the regulation of both the home country and the exchanges they trade on, making them a good option for individual investors who might not have the means to fully investigate financial statement validity.