A note on the industry returns of NASDAQ-listed ADRs

ABSTRACT

In this paper NASDAQ-traded ADRs are formed into eight different portfolios. Each of these portfolios is of companies in the same industry, but not necessarily the same country. Each of these eight portfolios produces returns that are very different from one another. The news for the investor is this: while it may be true that country choice matters, it is certainly the case that industry choice matters. Investors that held portfolios in the right industry made a lot of money. Investors that held portfolios in the wrong industries did not do nearly as well as others. The variation of rate of return difference and excess rate of return between the eight different industry portfolios is enormous.

KEYWORDS:

• American depository receipts
• portfolio selection
• industry diversification
• international diversification

JEL CLASSIFICATION:

• G11
• G12
• G15
• G14

Disclosure statement

No potential conflict of interest was reported by the authors.