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ADRE: Using ADRs To Invest In Emerging Market Stocks


  • International markets are divided into three segments: Developed, Emerging, and Frontier, the smallest.
  • With the spread of COVID-19 and the slow rollout of the vaccine in Emerging Market countries, investors are rightly concerned about the economic impact.
  • This article includes expert outlooks for Emerging Market investing going into 2021 and beyond along with exploring ADRE.
  • Believing that Emerging Markets will survive COVID-19, I am Bullish on ADRE for those looking for exposure to this equity segment.

Emerging Market Country map

Source: Wikiwand


Invesco BLDRS Emerging Markets 50 ADR Index Fund (NASDAQ:ADRE) is a unique ETF as it doesn't invest directly in Emerging Market stocks. It limits itself to the 50 stocks that comprise the S&P/BNY Mellon Emerging 50 ADR Index. This index only includes ADRs, American Depositary Receipts.

Investopedia.com defines ADRs as:

An American depositary receipt (ADR) is a negotiable certificate issued by a U.S. depositary bank representing a specified number of shares-often one share-of a foreign company's stock. The ADR trades on U.S. stock markets as any domestic shares would.

ADRs offer U.S. investors a way to purchase stock in overseas companies that would not be available otherwise. Foreign firms also benefit, as ADRs enable them to attract American investors and capital without the hassle and expense of listing on U.S. stock exchanges.

Source: investopedia.com

Of course, this means savvy investors can use ADRE's holdings to easily compile a list of Emerging Market ADRs and then pick their own subset based on countries and/sectors they think will perform the best. Keep in mind, ADRs focus on the largest companies. That focus on large, established companies is why I am Bullish on ADRE.

Expert views on the current and future outlook for Emerging Market stocks

Lazard Asset Management summarized their view as:

  • The recovery in emerging markets equities that began in late March 2020 picked up steam in the fourth quarter thanks to COVID-19 vaccine breakthroughs and the US election outcome. The MSCI Emerging Markets Index outperformed global developed markets equities in 2020.
  • We expect that emerging markets economies will benefit further as the vaccine is distributed in developed markets during the first half of 2021 and in emerging markets later in 2021 and 2022; value companies, in particular, are poised to benefit from higher global growth.

This article was written by

Retired Investor profile picture

Retired Investor has been investing since the 1980s and has a background in data analysis and pension fund management. He writes articles to help others prepare for retirement by investing in CEFs, ETFs, BDCs, and REITs. He is a long only investor and shares strategies for trading options with a focus on cash-secured-puts.

He is a contributing author to the investing group Hoya Capital Income Builder. Hoya specializes in the portfolio management of publicly traded real estate securities and dividend ETFs. Learn more.

Analyst’s Disclosure: I am/we are long EMF. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (2)

thumb.ai profile picture
@Retired Investor Why do you want the largest companies?

You mentioned the word "established" which implies reduced chance of a company going bankrupt. But I wasn't sure.
Retired Investor profile picture
@thumbsoup There’s that but main thought is these companies sell mostly to Developed countries whose economies will recover faster than EM where the smaller ones are more dependent, IMO.
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