What Is An ADR?

Believe it or not, you probably own more than one. Buying investments in a foreign stock market should be a tricky proposition. Even when you have found the right broker to help arrange the deal and hold the investment, you would still have to wrangle with the question of currency exchange, both in buying and in holding the investment.

Since 1927, individual U.S. investors have been making most of their foreign market investments through American Depository Receipts (ADR’s). In this process, a U.S. bank buys a parcel of shares from a foreign company, bundles them and issues them as an investment on a U.S. stock exchange.

What you buy, then, is a share in that bundle of U.S. bank-owned investments. It’s a little less exciting than owning the latest Chinese tech start-up, but it does mean you don’t have to read your quarterly statement in Yuan.