America Depositary Receipt and others

Summaries

ADR has 3 levels:

L1: traded OTC

L2: listed in stock exchange. Has to submit reports and comply with SEC regulations

L3: listed in stock exchange with IPO. Has to submit reports and comply with SEC regulations

Mutual fund NAV = (asset value – liability)/ shares outstanding

Closed-end country fund – closed end fund investing stocks in a single country

1)      if that country has restriction on investment, the fund will be traded at premium

2)      Market price of country fund is highly correlated to the US market (slow response to it’s own NAV change)

3)      In developed country, country fund is usually traded at discount due to less liquidity (as people prefer direct investment or open-end funds)

EFT:

1)      tax efficient (because does not sell shares to redeem but just trading the EFT itself)

2)      special open-ended funds

3)      can be shorted or margined (not for open-end)

4)      traded close to the NAV (because allow redeem)

5)      Can be traded anytime in a day (unlike open-end, only price at the end of the day)