What do you think are the advantages and disadvantages of investing with an ADR instead of a foreign stock?
- Andrew SLv 41 decade agoBest Answer
Primarily you negate the currency risk; ie, your investment (as an ADR) isn't going to fall in value if the currency of the country the foreign firm trades in falls vs the dollar.
ADR's use US dollars even though they're shares of a foreign firm.
There's not really any disadvantages of using an ADR listing unless you want currency exposure (to improve your return if the foreign currency changes in value to your advantage).
- Anonymous1 decade ago
In general, I don't trust foreign governments and cultures with my investments as much as the US. I want to keep the control at home. In many places, you're a sitting duck for some dictator to take it from you, or pass some weird tax law like in Taiwan, or some outrageous ownership law like in Venezuela.
Just in case the obvious isn't clear, I should state the obvious.
For most people, it isn't feasible to buy a foreign stock any other way. I don't want to open a brokerage account in Tokyo, just to buy a hundred shares of Sony, and another one in China, and another one in Britain . . .