Carlo
Mon Jul 01 2024
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7 answers
1611
Why buy ADR instead of stock?
In the realm of finance and investing, a common question that arises is: "Why buy American Depositary Receipts (ADRs) instead of direct stocks?" The question highlights the dilemma investors often face when considering exposure to international markets. ADRs provide a convenient way for investors in one country to invest in stocks of companies listed in another country. However, the key considerations include cost, convenience, liquidity, and currency risk. While direct stocks may offer more direct ownership and potential voting rights, ADRs offer a simplified and often more liquid alternative. Additionally, currency fluctuations can have a significant impact on returns, making ADRs an attractive choice for investors seeking to hedge currency risk. So, why choose ADRs? It often boils down to a combination of factors tailored to each investor's specific needs and objectives.
