ADRs or American Depository Receipts represent foreign stocks that have been bought by a US bank and are then traded on US exchanges in USD. This grants US investors access to foreign company stock that might otherwise be unavailable on American exchanges. These certificates are traded in USD and therefore are exposed to exchange risk. ADRs may be subject to double taxation, both in foreign countries and in the US. A US income tax credit is typically granted for some or all the foreign taxes paid based on the investors’ tax situation. Finesse tracks country stock indices as ADRs because they automatically reflect what a US investor would be able to buy on a typical exchange, and the Exchange Rate is priced in, meaning returns are calculated after fluctuations in the Exchange Rate between the two countries.
