Canadian Investors Get Global Exposure with Canadian Depositary Receipts

Canadian investors seeking to diversify their portfolios have traditionally faced challenges such as foreign exchange risk, high share prices for U.S. mega-caps, and administrative complexity when holding foreign securities.

CANADIAN DEPOSITARY RECEIPTS (CDRs) offer a solution by providing a single, exchange-listed product that combines accessibility, currency stability, and fractional ownership.

A CDR represents a fraction of interest in a foreign company's stock, such as Apple, Amazon, or NVIDIA. For example, the Apple CDR trades at $44.61 CAD per share, while the common shares of Apple trade at around $316.83 USD (~$436.76 CAD).

The fractional interest is calculated by dividing the Canadian dollar value of the foreign company's stock on the Nasdaq by its value on the TSX.

Currency hedging is a key feature of CDRs, allowing investors to capture the underlying stock's performance without being exposed to currency fluctuations. The hedge adjusts daily, reflected in minor changes to the CDR ratio.