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Anonymous

18 Apr 2019

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General Investing

Investing in American Depository Receipt or directly in the underlying security?

Anyone had any experience in investing in ADR? any difference (pros/cons) investing in ADR over the underlying security or any precautions need to be considered prior placing position?

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YT

28 Dec 2018

ADR is a security that represents shares of a non-U.S. company that is held by a U.S. depositary bank outside the United States. If you wan to invest in Alibaba (a Chinese company) in NYSE, you will have to do it through ADR.

There are different types (sponsored vs unsponsored), different levels (1-3) and different ratio (ADR to no. of shares). You have to be aware of the exchange rate risk and different tax laws in the different country you are investing in. It's best to do your own research before buying.

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