Canadian Depositary Receipts Carve Out a Meaningful Role in Modern Canadian Portfolios

Canadian investors face familiar challenges when trying to gain exposure to global equities: foreign exchange risk, high share prices for US mega-caps, and administrative complexity.

Enter Canadian Depositary Receipts (CDRs), which offer a solution by blending accessibility, currency stability, and fractional ownership into a single, exchange-listed product.

A CDR is a Canadian-listed security that represents a fraction of interest in a foreign company's stock. The Apple Inc. CDR, for example, recently traded at C$44.61 per share, compared to the common shares of Apple Inc trading at US$316.83 (~C$436.76).

The fractional interest is calculated by dividing the Canadian dollar value of APPL on the Nasdaq by the Canadian dollar value of APPL that trades on the TSX. In this case, the ratio is approximately 10:1.