American Depositary Receipts – ADRs How You Can Invest in International Stocks through ADRs
(LifeWire) – American depositary receipts, or ADRs, are a bit of financial magic that deliver the world to the doors of US investors. First introduced by the investment house of JP Morgan in 1927, ADRs are simple in concept. In the most basic terms, A United States bank or investment institution places a certain amount of stock of a foreign company into its vaults – the “depositary” part of the name – then allows investors to buy shares in that collection of stocks, priced in US dollars. Those shares, or receipts, can then be traded on regular stock markets almost as though they were shares held directly in the foreign company itself, only the arrangement is better for US investors. Since ADRs are traded in US dollars and are securities that originate within the United States, they carry none of the cross-border fees or other hassles that might ensue if an investor from Peoria were to try to buy stock directly in a South Korean steel mill. The worst most investors have to worry about a
