CDRs vs. ADRs: What Canadian Investors need to know

Learn the key differences between Canadian Depositary Receipts (CDRs) and American Depositary Receipts (ADRs), and how each structure helps Canadians access international stocks.

By Erin Allen, CIM, BMO ETFs

(Sponsor Blog)

Investing outside of Canada sounds simple. Just buy shares of Apple, right? But if you’ve ever tried, you know it’s not that straightforward. You’ll need U.S. dollars, your brokerage will likely charge a steep currency conversion fee, and you’ll be exposed to foreign exchange (FX) risk the entire time you hold the stock.

That’s where depositary receipts come in. Canadian Depositary Receipts (CDRs) and American Depositary Receipts (ADRs) are two ways to buy foreign stocks without directly trading on an international exchange. They’re designed to make global investing easier: but they work differently.

In this article, we’ll break down the differences between CDRs and ADRs, which could help you determine which one makes more sense for your portfolio.

Canadian Depositary Receipts (CDRs)

CDRs are a homegrown solution designed to make global stocks more accessible to Canadian investors. Listed on a Canadian exchange and priced in Canadian dollars, CDRs give you exposure to foreign companies: without needing to exchange currency or worry about FX fluctuations.

What makes CDRs unique?

CDRs come with a built-in notional currency hedge. That means the value of the receipt adjusts for movements in the Canadian–U.S. dollar exchange rate (or other foreign exchange rate depending on the stock), helping reduce the impact of currency swings on your return. It’s a structural feature that’s automatically factored into the pricing of each CDR, so you don’t need to manage it yourself.

Another feature is fractional share access. Most CDRs are initially priced around CAD $10 per unit, making them more accessible than buying full shares of blue-chip companies like Tesla or Berkshire Hathaway in U.S. dollars. This structure makes it easier to build diversified portfolios: even with modest amounts of capital, which makes them particularly beginner-friendly.

Why consider CDRs?

Because CDRs trade on a Canadian exchange and in Canadian dollars, there’s no need for currency conversion, which means no currency conversion fees and the impact of currency movements is managed through a built-in notional hedge.

They also streamline global access: the current lineup includes U.S. giants, international developed-market companies.

And you can buy them at any major Canadian brokerage, just like any other Canadian-listed ETF or stock.

Notable examples in BMO’s CDR directory include ex-Canada companies like:

1. ASML Canadian Depositary Receipt (CAD Hedged) (Ticker: ASMH)
2. LVMH Canadian Depositary Receipts (CAD Hedged) (LV)
3. Nintendo Canadian Depositary Receipts (CAD Hedged) (NTDO)
4. Honda Canadian Depositary Receipts (CAD Hedged) (HNDA)
5. Tesla (TSLA) BMO Canadian Depositary Receipts (CAD Hedged) (ZTSL)
6. Berkshire Hathaway (BRK/B) BMO Canadian Depositary Receipt (CAD Hedged) (ZBRK)

With lower dollar-per-share amounts and built-in currency hedging, CDRs are designed to simplify international single-stock investing for Canadian portfolios.

American Depositary Receipts (ADRs)

ADRs are the original gateway to international investing for North American investors. Introduced nearly a century ago, ADRs were designed to make it easier for U.S. investors to buy foreign stocks: without dealing with foreign exchanges, unfamiliar regulations, or foreign currencies.

How ADRs work

ADRs trade in U.S. dollars on major U.S. exchanges like the NYSE and Nasdaq. Each ADR represents shares of a non-U.S. company, held by a U.S. depositary bank. These banks issue the ADRs and handle the underlying foreign shares.

There are two types of ADRs:

1. Sponsored ADRs are backed by the foreign company itself and often come with better disclosure, liquidity, and alignment with investor interests.
2. Unsponsored ADRs are issued by banks without the direct involvement of the company. These tend to be less liquid and may not offer the same level of investor information. They trade exclusively on Over-The-Counter (OTC) markets making them very hard to retail investors to access.

Unlike CDRs, most ADRs do not include currency hedging. Your returns will reflect not just the performance of the stock, but also any gains or losses from exchange rate movements between the foreign currency and the U.S. dollar.

Why investors use ADRs

ADRs are widely accepted and highly liquid, with a long track record. They provide convenient access to hundreds of international companies, particularly from developed and emerging markets in Europe, Asia, and Latin America.

But for Canadian investors, there are some added frictions. Because ADRs are priced in U.S. dollars, you’ll need to convert Canadian dollars to buy and sell them. That introduces currency conversion costs and FX risk, which can eat into returns.

For Canadian investors, ADRs still remain a viable route to global diversification. But they come with a few more moving parts compared to Canadian-listed alternatives that need to be accounted for.

CDR vs. ADR: Side-by-side comparison

Investor considerations: a checklist

When deciding between a CDR and an ADR, the best choice often depends on your specific needs as a Canadian investor. Here’s a checklist of key factors to think about:

1. ✓ Portfolio diversification with local convenience
   Both CDRs and ADRs give you access to global stocks, but only CDRs let you do it without leaving the Canadian market. You can trade them in Canadian dollars, through your regular Canadian brokerage account, during local market hours.
2. ✓ Currency risk management
   CDRs include a built-in notional hedge that helps offset the effects of exchange rate fluctuations. ADRs, on the other hand, generally leave you fully exposed to currency movements. If FX risk is something you’d rather not manage, CDRs offer a more hands-off approach.
3. ✓ Platform availability and ease of trading
   CDRs are listed on Cboe Canada or the TSX and available through all major Canadian brokerages. ADRs may require opening a U.S.-dollar account or converting currency at your broker’s posted rate, which can add friction and cost.
4. ✓ Liquidity considerations
   Don’t judge a CDR purely by its daily trading volume. Like ETFs, CDRs are backed by a market maker and priced based on the liquidity of the underlying security. As long as the underlying stock is liquid, the CDR should be as well: though always check bid-ask spreads¹ before placing a trade.

Bringing global investing closer to home

CDRs and ADRs both serve the same purpose: giving investors access to foreign stocks without having to trade directly on international exchanges. But for Canadians, the two structures offer very different experiences.

CDRs are purpose-built for Canadian investors. They trade in Canadian dollars, include a built-in notional hedge, and offer fractional access at lower entry prices. ADRs, while widely used and highly liquid, require U.S. dollars and often expose Canadian investors to foreign exchange risk and higher transaction costs.

If you’re a Canadian looking for a low-friction way to add global stocks to your portfolio — without currency conversions or opening a U.S.-dollar account — CDRs are often the more practical choice. ADRs may still make sense in some cases, especially for access to certain international markets or specific companies not yet available in CDR form.

Both structures represent important tools for democratizing global investing. The rise of CDRs in particular shows how product innovation can reduce barriers and expand opportunity: bringing the world a little closer for Canadian investors.

To learn more visit:  https://bmogam.com/ca-en/products/canadian-depositary-receipts/#cdr-faq

¹Bid-Ask Spread: the difference between the highest price a buyer is willing to pay (bid) and the lowest price a seller is willing to accept (ask) for a security. This spread represents a transaction cost and is a key indicator of market liquidity.

Publication Date: November 2025

Erin Allen, CIM,  is  Director, Online Distribution for BMO ETFs. Erinhas been a part of the BMO ETFs team driving growth since the beginning, joining BMO Global Asset Management in 2010 and working her way through a variety of roles gaining experience in both sales and product development. For the past 5+ years, Ms. Allen has been working closely with capital markets desks, index providers, and portfolio managers to bring new ETFs to market. More recently, she is committed to helping empower investors to feel confident in their investment choices through ETF education. Ms. Allen hosts the weekly ETF Market Insights broadcast, delivering ETF education to DIY investors in a clear and concise manner. She has an honors degree from Laurier University and a CIM designation.

Disclaimers:

The article is for informational or educational purposes only and does not provide investment advice or recommendations.. The information contained herein is not, and should not be construed as investment, tax or legal advice to any party. Particular investments and/or trading strategies should be evaluated and professional advice should be obtained with respect to any circumstance.

The viewpoints expressed by the author represent their assessment of the markets. Those views are subject to change without notice at any time. The information provided herein does not constitute a solicitation of an offer to buy, or an offer to sell securities nor should the information be relied upon as investment advice.

An investment in Canadian depositary receipts (“CDRs”) issued by Bank of Montreal (“BMO”) may not be suitable for all investors. Important information about these investments is contained in the short form base shelf prospectus and prospectus supplement for each series of CDRs (together, the “Prospectus”). Purchasers are directed to www.sedarplus.ca or to bmogam.com to obtain copies of the Prospectus and related disclosure before purchasing CDRs.

Each series of CDRs relates to a single class of equity securities (the “Underlying Shares”) of an issuer incorporated outside of Canada (the “Underlying Issuer”). For each series of CDRs, the Prospectus will provide additional information regarding such series, including information regarding the Underlying Issuer and Underlying Shares for such series. Neither BMO and its affiliates nor any other person involved in the distribution of CDRs accepts any responsibility for any disclosure provided by any Underlying Issuer (including Information contained herein or in the Prospectus that has been extracted from any Underlying Issuer’s publicly disseminated disclosure). Each series of CDRs is only offered to investors in Canada in accordance with applicable laws and regulatory requirements.

BMO Global Asset Management is a brand name under which BMO Asset Management Inc. and BMO Investments Inc. operate.

“BMO (M-bar roundel symbol)” is a registered trademark of Bank of Montreal, used under licence.