{"id":1927,"date":"2019-09-27T13:33:00","date_gmt":"2019-09-27T13:33:00","guid":{"rendered":"https:\/\/analystprep.com\/cfa-level-1-exam\/?p=1927"},"modified":"2026-01-09T10:37:12","modified_gmt":"2026-01-09T10:37:12","slug":"methods-investing-non-domestic-equity-securities","status":"publish","type":"post","link":"https:\/\/analystprep.com\/cfa-level-1-exam\/equity\/methods-investing-non-domestic-equity-securities\/","title":{"rendered":"Methods for Investing in Non-domestic Equity Securities"},"content":{"rendered":"\n<script type=\"application\/ld+json\">\n{\n  \"@context\": \"https:\/\/schema.org\",\n  \"@type\": \"VideoObject\",\n  \"name\": \"Overview of Equity Securities (2025 Level I CFA\u00ae Exam \u2013 Equity \u2013 Module 4)\",\n  \"description\": \"This video lesson covers the fundamentals of equity securities, including their types, voting rights, and ownership structures. It explores differences between public and private equity, investing in foreign equities, and risk-return profiles. Viewers also learn how equity finances assets and compare book vs. market value, cost of equity, and ROE.\",\n  \"uploadDate\": \"2022-05-11T00:00:00+00:00\",\n  \"thumbnailUrl\": \"https:\/\/i.ytimg.com\/vi\/dzzqUd0SqtQ\/hqdefault.jpg\",\n  \"contentUrl\": \"https:\/\/www.youtube.com\/watch?v=dzzqUd0SqtQ\",\n  \"embedUrl\": \"https:\/\/www.youtube.com\/embed\/dzzqUd0SqtQ\",\n  \"duration\": \"PT36M43S\"\n}\n<\/script>\n<script type=\"application\/ld+json\">\n{\n  \"@context\": \"https:\/\/schema.org\",\n  \"@type\": \"QAPage\",\n  \"@id\": \"https:\/\/analystprep.com\/cfa-level-1-exam\/equity\/methods-investing-non-domestic-equity-securities\/#qapage-question-1\",\n  \"mainEntity\": {\n    \"@type\": \"Question\",\n    \"@id\": \"https:\/\/analystprep.com\/cfa-level-1-exam\/equity\/methods-investing-non-domestic-equity-securities\/#question-1\",\n    \"name\": \"You\u2019re an investor based in the US who wants to invest in non-domestic equity securities without exchanging your US dollars for foreign currency. What type of investment should you avoid?\",\n    \"text\": \"You\u2019re an investor based in the US who wants to invest in non-domestic equity securities without exchanging your US dollars for foreign currency. What type of investment should you avoid?\\nA. Direct investments.\\nB. Global Registered Shares (GRS).\\nC. American Depository Receipts (ADR).\",\n    \"answerCount\": 1,\n    \"author\": {\n      \"@type\": \"Organization\",\n      \"name\": \"AnalystPrep\"\n    },\n    \"acceptedAnswer\": {\n      \"@type\": \"Answer\",\n      \"@id\": \"https:\/\/analystprep.com\/cfa-level-1-exam\/equity\/methods-investing-non-domestic-equity-securities\/#answer-1\",\n      \"text\": \"A. Direct investments. Direct investments require purchasing shares on foreign exchanges using the local currency, which involves exchanging US dollars for foreign currency.\",\n      \"author\": {\n        \"@type\": \"Organization\",\n        \"name\": \"AnalystPrep\"\n      }\n    }\n  }\n}\n<\/script>\n\n\n\n\n<iframe loading=\"lazy\" width=\"611\" height=\"344\"\n  src=\"https:\/\/www.youtube.com\/embed\/dzzqUd0SqtQ\"\n  title=\"YouTube video player\"\n  frameborder=\"0\"\n  allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\"\n  referrerpolicy=\"strict-origin-when-cross-origin\"\n  allowfullscreen>\n<\/iframe>\n\n\n\n<p>[vsw id=&#8221;dzzqUd0SqtQ&#8221; source=&#8221;youtube&#8221; width=&#8221;611&#8243; height=&#8221;344&#8243; autoplay=&#8221;no&#8221;]<\/p>\n<p>Along with the technological advancements in recent decades, it has become significantly easier for investors to make international investments at low costs. Similarly, international issuers are now more capable of raising money from foreign investors. This increase in global investment has allowed many emerging markets to develop and stabilize their economies. Investments in non-domestic equity securities can be made directly or through depositary receipts, global registered shares, or baskets of listed depository receipts.<\/p>\n<h2><strong>Direct Investment<\/strong><\/h2>\n<p>Direct investing involves buying and selling securities directly in foreign markets, meaning that all the transactions are in the company\u2019s, not the investor\u2019s, domestic currency. Investing directly in foreign securities may result in less transparency and more volatility as audited financial information may not be provided, and the market may be less liquid.<\/p>\n<h2><strong>Depository Receipts<\/strong><\/h2>\n<p>A depository receipt is a security that trades like an ordinary share on a local exchange and represents an economic interest in a foreign company. A depository receipt is created when foreign equity shares are deposited in a bank that then issues receipts representing the deposited shares.<\/p>\n<p>Depository receipts sponsored by the issuing company grant investors the same rights as direct owners in common shares and are usually more regulated, while unsponsored receipts do not give investors voting rights. There are two main types of depository receipts:<\/p>\n<ul>\n<li><strong>Global Depository Receipt (GDR)<\/strong>: issued outside the company\u2019s home country and outside the United States. GDRs are not subject to foreign ownership and capital flow restrictions that the issuing company\u2019s home country may impose. The majority of GDRs are denominated in US dollars.<\/li>\n<li><strong>American Depository Receipt (ADR)<\/strong>: a US dollar-denominated security that trades like a common share on US exchanges. There are four primary types of ADRs, with each type having different levels of corporate governance and filing requirements.<\/li>\n<\/ul>\n<h2><strong>Global Registered Share (GRS)<\/strong><\/h2>\n<p>A global registered share is a common share traded on different stock exchanges around the world in different currencies. GRSs are more flexible than depository receipts because they represent an actual ownership interest and can be traded anywhere without currency conversion.<\/p>\n<h2><strong>Basket of Listed Depository Receipts (BLDR)<\/strong><\/h2>\n<p>A BLDR is an exchange-traded fund that represents a portfolio of depository receipts. These securities can allow investors to gain broader exposure to a foreign market and easily implement hedging or arbitrage trading strategies.<\/p>\n<blockquote>\n<h3><strong>Question<\/strong><\/h3>\n<p>You\u2019re an investor based in the US who wants to invest in non-domestic equity securities without exchanging your US dollars for foreign currency. What type of investment should you avoid?<\/p>\n<ol style=\"list-style-type: upper-alpha;\">\n<li data-tadv-p=\"keep\">Direct investments.<\/li>\n<li data-tadv-p=\"keep\">Global registered shares (GRS).<\/li>\n<li data-tadv-p=\"keep\">American depository receipts (ADR).<\/li>\n<\/ol>\n<p><strong>Solution<\/strong><\/p>\n<p>The correct answer is <strong>A<\/strong>.<\/p>\n<p><strong> Direct investments <\/strong>involves buying shares of foreign companies directly on their local exchanges, which requires exchanging US dollars for the foreign currency used in the transaction.<\/p>\n<p><strong>B is incorrect.<\/strong> <strong>Global Registered Shares (GRS)<\/strong>&nbsp;are shares of a company that can be traded in multiple countries and are often denominated in US dollars, allowing investors to invest without dealing with foreign currency directly.<\/p>\n<p><strong>C is incorrect.&nbsp;<\/strong><strong>American Depository Receipts (ADR) <\/strong>are certificates issued by a US bank representing shares of a foreign company. They are traded on US exchanges in US dollars, so investors can avoid dealing with foreign currencies.<\/p>\n<\/blockquote>","protected":false},"excerpt":{"rendered":"<p>[vsw id=&#8221;dzzqUd0SqtQ&#8221; source=&#8221;youtube&#8221; width=&#8221;611&#8243; height=&#8221;344&#8243; autoplay=&#8221;no&#8221;] Along with the technological advancements in recent decades, it has become significantly easier for investors to make international investments at low costs. Similarly, international issuers are now more capable of raising money from foreign&#8230;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[8],"tags":[],"class_list":["post-1927","post","type-post","status-publish","format-standard","hentry","category-equity","blog-post","no-post-thumbnail","animate"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.9 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Investing in Non-Domestic Equities | CFA Level 1<\/title>\n<meta name=\"description\" content=\"Explore methods for investing in global equities, including ADRs, global shares, and direct foreign market investments.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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