Foreign Investment & ADR

It is a good practice to own some foreign stocks thus lowering your risk with diversification and increasing your return. Investors still need to do their homework well on any country and company in which they wish to invest. However, ready access to such research is sometimes very hard to get. Lower dollar in recent months have been favorable for some of the stocks, but if the dollar starts strengthening itself for an extended period, investors may find themselves in troubled water.

American Depository Receipts (ADR) have been a popular investment tool in recent months. The bulk of these listings are from Europe, though emerging markets are increasing in representation. ADRs from China and India have been very popular and successful investments. We can tell you so many names which have consistently produced good return, but, as you know, we always hesitate several times before investing in any individual stock.

If you think it is too tough to do research and keep track of these foreign companies, our suggestion is to go with one of the Exchange-TradedFunds (ETF) that track U.S. ADRs. The BLDRS funds, offered by Nasdaq and the Bank of New York, include BLDRS Emerging Markets 50 ADR Index (ADRE) , BLDRS Developed Markets 100 ADR Index (ADRD) , BLDRS Europe 100 ADR Index (ADRU) or the BLDRS Asia50 ADR Index (ADRA).