2019 brokerage firms commissions and fees on ADRs (American Depository Receipts). IB, Firstrade, Webull, Merrill Edge, Ally Invest, Chase charges on ADRs.

Brokers ADR Commisions


Why Some Investors Choose to Invest in ADRs

An ADR (American Depository Receipt) is a U.S.-listed security that represents ownership in a foreign company whose primary listing is on a non-U.S. exchange. In many cases, one share of an ADR is equivalent to owning one share of the foreign company’s stock; however, this ratio doesn’t have to be one to one. Many investors include ADRs in their portfolio, as they are an easy way to gain exposure to foreign firms without needing to get direct access to another country’s market. There are also benefits to the foreign firms that have ADRs, as it opens the firm up to a larger group of potential investors and generally results in increased liquidity for their stock. This article will explore the many reasons for why you may want to include ADRs in your portfolio.

Why Not Just Use ETFs for International Exposure?

Investors today have many vehicles that can be used to add international exposure to their portfolio, namely ETFs and mutual funds with a global focus. These are great ways to add diversified international exposure to your portfolio, but what if you think the popularity and amount of money going into passive ETFs make them risky investments right now? Or, what if you are a fundamental investor that prefers to pick individual companies to invest in and you’ve found a great investment, but the company is headquartered in another country? These are both examples of scenarios where an ETF wouldn’t meet an investor’s needs, and where looking for appropriate ADRs to invest in would make a lot of sense.


Why Can’t I Just Buy the Foreign Company’s Stock Directly?

Foreign Markets Can Be Difficult to Access Directly

If you’ve located a great investment in a foreign public company it can sometimes be a costly and burdensome process for foreigners to invest directly in that market due to regulatory requirements and even local laws that are restrictive to foreign investors. Some U.S. brokers may be able to help you purchase foreign stocks directly in some markets, but this service would likely incur extra costs and there is no guarantee that they’d be able to secure the amount of shares that you want. Another option would be to open a brokerage account in the foreign country, however local laws may restrict when and how much money you are able to transfer to/from that country.

ADRs Let You Jump Over These Hurdles

An ADR lets you leap over most of these hurdles because although it represents ownership in the foreign company, it is issued by a U.S. bank (“the sponsoring bank”) and trades on a U.S. exchange, and is therefore a security that is subject to U.S. regulations. With ADRs, you don’t need to open a brokerage in the foreign country or pay your broker to play the “middle man” and navigate a foreign market for you.