What you can own
ADR
Also called American depositary receipt or GDR
A certificate traded on a US exchange that represents shares in a foreign company.
How it works
A bank holds the underlying foreign shares and issues receipts that trade in dollars during US hours, which removes the need to deal on a foreign exchange.
One receipt may represent several underlying shares or a fraction of one, so the price is not directly comparable to the home listing.
Where it misleads people
ADRs carry a custody fee deducted from dividends, and the underlying currency risk does not disappear just because the price is quoted in dollars.
Related terms
- ListingA company’s admission to trade its shares on a particular exchange, under that exchange’s rules.
- Currency riskThe risk that exchange-rate moves change your return on a foreign holding.
- ExchangeA regulated marketplace where buyers and sellers of securities are matched under published rules.
- DividendA cash payment a company makes to its shareholders out of its profits.
More in What you can own
- Commercial paper
- Structured product
- Commodity
- REIT
- Common stock
- Preferred stock
- Funds from operations
- Money market fund
All 10 What you can own terms · The full glossary, 433 terms
Educational reference only. Nothing here is investment advice or a recommendation to buy or sell anything, and tax treatment depends on your own circumstances and the country you are in.