WEBS’ SITES
“Could you point me toward more information concerning WEBS? I currently own shares in the Vanguard Asia Pacific index fund, but one of your columns got me thinking that I would be better served by simply buying WEBS for the same countries that VPACX covers. One more question: can you tell me an easy way to find the net asset value for closed end funds?” – Josh Kloepping
A.T.: WEBS — which are baskets of stocks designed to represent the market of a particular country — all trade on the American Stock Exchange. Their three-letter symbols all begin with EW (Japan is: EWJ). Barron’s lists the NAV and discounts/premiums of closed-end funds each week.
ADRs
“How do I go about buying foreign stocks? I am somewhat new to this. I am interested in Adidas AG, from Germany, which I am told is traded as an ADR on the New York Stock Exchange. I don’t understand what ADR means, or what to do to buy.” – Bill McSorley
A.T.: ADRs are American Depository Receipts. To buy, just call any broker. That’s the point of ADRs: to make it easy for U.S. investors. They trade just like U.S. stocks, in American dollars, and typically represent one or two shares of the foreign stock. A depository institution like J.P. Morgan holds the actual foreign shares and takes care of paying out the dividends.
Alternatively, you can instruct your broker to buy shares “on the Frankfurt” or on whatever exchange your foreign stock actually trades. Many brokers aren’t set up to do that — and will charge you more for the trouble if they are. This is what you’d need to do with a stock for which there are no ADRs.
Alternatively-alternatively, if you were rich, you could set up a brokerage account in Germany or Uganda or wherever and do your trading via your local German or Ugandan broker. But this is, at least for now, difficult and impractical for most people; your account wouldn’t be covered by SIPC insurance or other U.S. regulatory oversight; you’d have to check an extra box on your Form 1040 about maintaining an account overseas; your balances wouldn’t automatically be swept into a money market fund to earn interest; you wouldn’t be able to see your account on-line — and I’ll bet they’d charge you a lot more than $8 a trade.
