Unsubscribe

Confirm you would like to unsubscribe from this list

You have unsaved changes on the page. Would you like to save them?

Remove strategy

Confirm you would like to remove this strategy from your list

Welcome to Thornburg

Please select your location and role to help personalize the site.
Please review our Terms & Conditions

For Institutional / Wholesale / Professional Clients

The content on this website is intended for institutional and professional investors in the United States only and is not suitable for individual investors or non-U.S. entities. Institutional and professional investors include pension funds, investment companies registered under the Investment Company Act of 1940, financial intermediaries, consultants, endowments and foundations, and investment advisors registered under the Investment Advisors Act of 1940.

TERMS AND CONDITIONS OF USE

Please read the information below. By accessing this web site of Thornburg Investment Management, Inc. ("Thornburg" or "we"), you acknowledge that you understand and accept the following terms and conditions of use.

Disclaimers

Products or services mentioned on this site are subject to legal and regulatory requirements in applicable jurisdictions and may not be licensed or available in all jurisdictions and there may be restrictions or limitations to whom this information may be made available. Unless otherwise indicated, no regulator or government authority has reviewed the information or the merits of the products and services referenced herein. Past performance is not a reliable indicator of future performance. Investments carry risks, including possible loss of principal.

Reference to a fund or security anywhere on this website is not a recommendation to buy, sell or hold that or any other security. The information is not a complete analysis of every material fact concerning any market, industry, or investment, nor is it intended to predict the performance of any investment or market.

All opinions and estimates included on this website constitute judgements of Thornburg as at the date of this website and are subject to change without notice.

All information and contents of this website are furnished "as is." Data has been obtained from sources considered reliable, but Thornburg makes no representation as to the completeness or accuracy of such information and has no obligation to provide updates or changes. Thornburg disclaims, to the fullest extent of the law, any implied or express warranty of any kind, including without limitation the implied warranties of merchantability, fitness for a particular purpose and non-infringement.

If you live in a state that does not allow disclaimers of implied warranties, our disclaimer may not apply to you.

Although Thornburg intends the information contained in this website to be accurate and reliable, errors sometimes occur. Thornburg does not warrant that the information to be free of errors, that the functions contained in the site will be uninterrupted, that defects will be corrected or that the site and servers are free from viruses or other harmful components. You agree that you are responsible for the means you use to access this website and understand that your hardware, software, the Internet, your Internet service provider, and other third parties involved in connecting you to our website may not perform as intended or desired. We also disclaim responsibility for damages third parties may cause to you through the use of this website, whether intentional or unintentional. For example, you understand that hackers could breach our security procedures, and that we will not be responsible for any related damages.

Thornburg Investment Management, Inc. is regulated by the U.S. Securities and Exchange under U.S. laws which may differ materially from laws in other jurisdictions.

Online Privacy and Cookie Policy

Please review our Online Privacy and Cookie Policy, which is hereby incorporated by reference as part of these terms and conditions.

Third Party Content

Certain website's content has been obtained from sources that Thornburg believes to be reliable as of the date presented but Thornburg cannot guarantee the accuracy, timeliness, completeness, or suitability for use of such content. The content does not take into account individual investor's circumstances, objectives or needs. The content is not intended as an offer or solicitation with respect to the purchase or sale of any security or other financial instrument or any investment management services, nor does it constitute investment advice and should not be used as the basis for any investment decision.

Suitability

No determination has been made regarding the suitability of any securities, financial instruments or strategies for any investor. The website's content is provided on the basis and subject to the explanations, caveats and warnings set out in this notice and elsewhere herein. The website's content does not purport to provide any legal, tax or accounting advice. Any discussion of risk management is intended to describe Thornburg's efforts to monitor and manage risk but does not imply low risk.

Limited License and Restrictions on Use

Except as otherwise stated in these terms of use or as expressly authorized by Thornburg in writing, you may not:

  • Modify, copy, distribute, transmit, post, display, perform, reproduce, publish, broadcast, license, create derivative works from, transfer, sell, or exploit any reports, data, information, content, software, RSS and podcast feeds, products, services, or other materials (collectively, "Materials") on, generated by or obtained from this website, whether through links or otherwise;
  • Redeliver any page, text, image or Materials on this website using "framing" or other technology;
  • Engage in any conduct that could damage, disable, or overburden (i) this website, (ii) any Materials or services provided through this website, or (iii) any systems, networks, servers, or accounts related to this website, including without limitation, using devices or software that provide repeated automated access to this website, other than those made generally available by Thornburg;
  • Probe, scan, or test the vulnerability of any Materials, services, systems, networks, servers, or accounts related to this website or attempt to gain unauthorized access to Materials, services, systems, networks, servers, or accounts connected or associated with this website through hacking, password or data mining, or any other means of circumventing any access-limiting, user authentication or security device of any Materials, services, systems, networks, servers, or accounts related to this website; or
  • Modify, copy, obscure, remove or display the Thornburg name, logo, trademarks, notices or images without Thornburg's express written permission. To obtain such permission, you may e-mail us at info@thornburg.com.

Severability, Governing Law

Failure by Thornburg to enforce any provision(s) of these terms and conditions shall not be construed as a waiver of any provision or right. This website is controlled and operated by Thornburg from its offices in Santa Fe, New Mexico. The laws of the State of New Mexico govern these terms and conditions. If you take legal action relating to these terms and conditions, you agree to file such action only in state or federal court in New Mexico and you consent and submit to the personal jurisdiction of those courts for the purposes of litigating any such action.

Termination

You acknowledge and agree that Thornburg may restrict, suspend or terminate these terms and conditions or your access to, and use, of the all or any part this website, including any links to third-party sites, at any time, with or without cause, including but not limited to any breach of these terms and conditions, in Thornburg's absolute discretion and without prior notice or liability.

Decline
Give Us a Call

Fund Operations
800.847.0200

FIND ANOTHER CONTACT
ADRs and currency risk.
Markets

American Depositary Receipts (ADRs) & Foreign Currency Risks

Todd Wax, CFA
Fixed Income Analyst
25 Aug 2017
2 min read

Dispel the myth that ADRs do not carry foreign currency risks. Learn more.

Prices of American depositary receipts reflect both a foreign firm’s locally traded share price and the exchange rate movements of its home country’s currency against the dollar.

A common misperception is that American depositary receipts, which bundle ordinary shares of an overseas-listed company into a U.S.-traded security, don’t carry currency risk. Driving the confusion is the fact that ADRs, as they are commonly known, are traded in U.S. dollars. While ADRs effectively spare U.S. investors the administrative expense and foreign tax assessments associated with trading in foreign-listed stocks, they don’t nullify the impact of currency exchange rate fluctuations.

The price of an ADR is affected by the movements of both the company’s local share price and the national currency rate of exchange against the U.S. dollar. The same is true of a U.S. mutual fund that invests internationally, as it is priced in U.S. dollars but most often holds local currency-denominated ordinary shares of foreign companies. Obviously, the mutual fund will be influenced by foreign currency movements as they translate back into U.S. dollars. It’s similar with an ADR, which reflects both the local share return and currency effect.

Part of the diversification benefit of investing internationally is foreign currency risk. Of course, such risk can help or hurt overall returns for U.S. investors, depending on the degree to which it is hedged with currency forwards. So far this year, the U.S. dollar has broadly weakened against foreign developed and emerging market currencies. Hence, unhedged U.S. international, emerging market and global portfolios have benefited from the gains of overseas currencies against the U.S. dollar. Those that have hedged their currency exposures have seen a drag from those hedges, though in the case of major currencies, the costs of hedging are low, determined as they are by prevailing benchmark interest rates.

Beyond the costs associated with currency hedging, savvy investors in overseas securities will consider a number of other factors, including corporate fundamentals such as the currencies in which the bulk of a company’s costs and revenues are denominated. Moreover, a foreign multinational company may also hedge its own currency risk exposures. At the macroeconomic level, benchmark interest rate differentials between the U.S. and the home country, along with trends in the country’s balance of payments, clearly matter for the outlook of the currency’s exchange rate.

Over time, partial and dynamic hedging can reduce portfolio volatility of U.S. mutual funds focused on overseas investing. By the same token, currency effects in ADR returns may be a wash over the long run.

Discover more about:

Stay Connected

Subscribe now to stay up-to-date with Thornburg’s news and insights.
Subscribe

More Insights

Woman sits at her desk analyzing financial forecasts
Markets & Economy

Market Concentration and the Fed’s Policy Outlook

Explore the recent trends in market concentration and examine the implications of the Federal Reserve's policy decisions for the rest of 2024.
Two men stand in a desert holding a rope pulling against each other
Markets & Economy

Value vs. Growth: Does Another Fed Hike Matter?

Discover why value and income-oriented stocks are set to outperform in today's market dominated by rising interest rates and persistent inflation.
Woman calculates some financial decisions over her desk.
Markets & Economy

The Value of Dividends and Munis to Stoke Income

Explore the impact of high dividend stocks and municipal bonds in a rising rate environment amid increasing government debt and new administrative policies.
A few people using a map and a compass to pinpoint their current location and future destination.
Economy

Navigating Recession, the Fed, Inflation and Borrowing

Examine the current economic complexities while considering consumer demand, corporate resilience, and interest rates to anticipate market risks in 2024.
Young man checks his airline status against his mobile ticket.
Monetary & Fiscal Policy

Recession and Reversion to the Mean

Exploring the economic landscape reveals persistent recession signals and elusive downturns shaping the outlook. Read about the interplay of factors now.
Webcasts image, fixed income portfolios as the fed ponders a pivot.
Fixed Income

How to Position Bond Portfolios as the Fed Ponders a Pivot

The Fed's changing interest rate policy adds uncertainty to the bond market, highlighting the need for resilient portfolios amid inflation and economic changes.

Our insights. Your inbox.

Sign up to receive timely market commentary and perspectives from our financial experts delivered to your inbox weekly.