Depositary receipt

A depository receipt allows investors to access overseas shares in their own market and currency. Rather than buying an overseas share direct and facing currency issues, plus the headache of trying to buy via an overseas broker, an investor can buy an American Depository Receipt (ADR) in dollars or a Global Depository Receipt (GDR) in sterling or euros instead. This is a separate piece of paper that represents the underlying shares, but is available in the investor’s local currency and in their home market.

Typically, a bank will create the ADRs or GDRs by buying shares in the home market and then generating depository receipts according to a ratio – say, ten shares to one ADR. An ADR investor then has similar rights to a normal shareholder – the ADR can be traded like a share and will also pay dividends, assuming the underlying company offers them.

• See Tim Bennett’s video tutorial: Depository receipts: An easy way to invest in foreign firms.

MoneyWeek magazine

Latest issue:

Magazine cover
In the balance

How May 2015 could hit your pocket

The UK's best-selling financial magazine. Take a FREE trial today.
Claim 4 FREE Issues

Russell Napier: deflation is coming – hold on to your cash

Financial historian Russell Napier talks to Merryn Somerset Webb about the next deflationary bust – why it's coming, what it means for you, and how you can survive it.


Which investment platform?

When it comes to buying shares and funds, there are several investment platforms and brokers to choose from. They all offer various fee structures to suit individual investing habits.
Find out which one is best for you.


28 November 1660: the Royal Society is founded

After the restoration of the monarchy, members of the 'Invisible College' asked King Charles II to approve their scientific and literary society on this day in 1660.