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History has shown that buying internationally will lower your risk and improve your return over the...

History has shown that buying internationally will lower your risk and improve your return over the long run. Where might you put money internationally and how? Additionally, what are American Depository Receipts (ADRs)?

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Answer #1

Investing internationally helps in diversification of portfolio risk, exploiting arbitrage opportunities, hedge foreign currency risk and earn higher returns. International investing options are:

1.Stocks of foreign companies

2. International index funds

3. Euro bonds

4. Fully hedged bonds

5. Floating rate notes

6. Currency futures

7. Currency options

American depository receipts are US denominated negotiable instruments for a receipt of foreign stock which are in custody with a bank in the US. These are issued for trading stocks outside the US.

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