We study the relative diversification potential of American Depository Receipts (ADRs) as compared to the underlying shares as well as the relative diversification potential of closed-end country funds as compared to the foreign market indexes across various economic conditions. We find that,...

This study evaluates country funds versus American Depository Receipts (ADRs) as tools for international diversification. A portfolio of available ADRs from a specific country (i.e. an ADR index) should provide similar returns to an indexed country fund. We found, however, that ADRs provided...