Canadian Investors Find a Solution to Global Equity Challenges
Canadian investors have long faced challenges when it comes to accessing global equities. The problem of foreign exchange risk, high share prices for U.S. mega-caps, and administrative complexity has been a persistent one.
The solution was found in Canadian Depositary Receipts (CDRs), which combine 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. For example, the Apple Inc. CDR (TSX: AAPL) was recently trading at C$44.61 per share, while the common shares of Apple Inc (NSD: AAPL) were 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.