PT  - JOURNAL ARTICLE
AU  - Tian Yuan
AU  - Rakesh Gupta
AU  - Eduardo Roca
TI  - Why Not Diversify into Emerging Equity Markets via ADRs?
AID  - 10.3905/joi.2016.25.2.018
DP  - 2016 May 31
TA  - The Journal of Investing
PG  - 18--27
VI  - 25
IP  - 2
4099  - https://pm-research.com/content/25/2/18.short
4100  - https://pm-research.com/content/25/2/18.full
AB  - American depositary receipts (ADRs) are typically issued by a U.S. depository bank to represent shares in non-U.S. companies. This article seeks to identify whether investing in ADR market indexes provides greater diversification benefits for U.S. investors compared with those gained from investing in foreign stock market indexes. Using data from the world’s four largest emerging markets—Brazil, Russia, India, and China (BRIC), the authors find that diversification benefits tend to vary with time and investors diversifying into the ADR market can enjoy higher rewards for the level of risk. The incremental wealth may be attributed to the default security analysis, resulting in a nonmarket premium for investors.TOPICS: Security analysis and valuation, equity portfolio management, emerging