2009 09 ADR-GDR-Exciting Opp for Investing Overseas-Investment Focus

8/8/2019 2009 09 ADR-GDR-Exciting Opp for Investing Overseas-Investment Focus

http://slidepdf.com/reader/full/2009-09-adr-gdr-exciting-opp-for-investing-overseas-investment-focus 1/6



Individual investors looking to access the global market couldalso purchase foreign ordinary shares. However, the cost isprohibitive for most small investors. The fees and expensesthat can be attached to these transactions include the costsrelated to currency translation, custodial fees, settlement feesfor executing transactions, mark-up fees charged by foreign-exchange traders for executing currency transactions, stamp-duty taxes levied on transfers, broker commissions, and otherservice charges and indirect expenses—all of which would beincurred in multiple countries. 9

Conclusion: Expanding Opportunities in ADRsWe believe that ADRs are the vehicle of choice for individualinvestors accessing foreign markets, since they are priced andtraded in U.S. dollars, with dividends paid promptly in U.S.dollars. Also, the liquidity of ADR issues may be superior to

that of local shares when U.S. ownership is proportionatelyhigh. ADRs are simple and cost-effective, since they surmountmany of the operational and custodial obstacles associated withinvesting in foreign ordinary shares. All of these factors havecombined to popularize ADRs and GDRs, with tradingvolume increasing steadily over the past decade (as shown inExhibit 3) and rising 14% to a record 72.1 billion DRs duringthe first six months of 2009. 10

A thoughtful, strategic international exposure may reduce therisk of an overall portfolio, while positioning it to capture theupside of the international markets. Furthermore, financiallyproductive companies priced at attractive valuations can oftenbe found outside of the United States. With the recent andcontinuing expansion of the opportunity set, we believe thatADRs, and GDRs, offer a compelling way to take advantage of international opportunities.

15.9

39.252.6

12.4 15.5

28.7 31.1

32.1

33.137.4

76.4

118.0

0

($)

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

97 98 99 00 01 02 03 04 05 06 07 080.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

Value ($B) – LHS

Volume (B) – RHS

E X H I B I T 3 : A N N U A L U . S . - L I S T E D D R T R A D I N G

As of December 31, 2008Source: The Bank of New York Mellon

5



Investment Focus

Lazard N et.comLazard Asset Management llc 3o Rockefeller PlazaN ew York, N Y 1o112-63oo

09/09 HB00113-093

N O T E S

1 Source: MSCI. Using float-adjusted market capitalization.

2 The Bank of New York Mellon, “Depositary Receipts Continue to Trade at Record Levels Despite Volatile Global Equity Markets During First Half of 2009,”

July 13, 20093 Source: The Bank of New York Mellon

4 The Bank of New York Mellon, “Depositary Receipts Continue to Trade at Record Levels Despite Volatile Global Equity Markets During First Half of 2009,” July 13, 2009

5 As of July 22, 2009. Source: Unilever PLC ADR Shareholder Investor Centre and Nestlé SA Investor Relations

6 As of July 22, 2009. Source: Roche Investor Relations

7 The Global Guru, http://www.theglobalguru.com/article.php?id=177&offer=GURU001

8 Bankers Trust, “Depositary Receipt Handbook”

9 The Bank of New York Mellon, “The Global Equity Investment Guide: The Case for Investing in Depositary Receipts”

10 The Bank of New York Mellon, “Depositary Receipts Continue to Trade at Record Levels Despite Volatile Global Equity Markets During First Half of 2009,” July 13, 2009

I M P O R TA N T I N F O R M AT I O N

Published on September 17, 2009.Equity securities will fluctuate in price; the value of your investment will thus fluctuate, and this may result in a loss. Securities in certain non-domestic countries maybe less liquid, more volatile, and less subject to governmental supervision than in one’s home market. The values of these securities may be affected by changes incurrency rates, application of a country’s specific tax laws, changes in government administration, and economic and monetary policy.

The securities identified are not necessarily held by Lazard Asset Management for all client portfolios, and should not be considered a recommendation orsolicitation to purchase or sell these securities. It should not be assumed that any of the referenced securities were or will prove to be profitable, or that theinvestment decisions we make in the future will be profitable or equal to the investment performance of securities referenced herein.

The information and opinions presented have been obtained or derived from sources believed by Lazard to be reliable. Lazard makes no representation as totheir accuracy or completeness. All opinions expressed herein are as of the published date unless otherwise specified, and are subject to change.

© 2009 Lazard Asset Management LLC

6

2009 09 ADR-GDR-Exciting Opp for Investing Overseas-Investment Focus

Documents

Transcript of 2009 09 ADR-GDR-Exciting Opp for Investing Overseas-Investment Focus