Direct Purchase Plans: The Foreign Option
by Jon Harris
With current growth rates in many international markets outpacing growth in the U.S., many individual investors are casting a longing look at the foreign markets.
Mutual funds that invest overseas are one approach to foreign diversification. But for investors who want to purchase individual foreign stocks, American depositary receipts (ADRs) offer an alternative.
An ADR is a negotiable certificate that trades like a common stock; it is issued by a U.S. bank and represents shares of a non-U.S. publicly traded company. They are priced in U.S. dollars and owners avoid many costs associated with direct foreign investment.
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