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Which should I buy: F shares or ADRs?

Given the choice between a stock with a five-letter ticker that ends with "F" and one that ends with "Y", which should I buy? Lots of foreign companies have both F-shares and Y-shares traded on OTC Markets in the US. For example, Imperial Brands PLC:

Imperial Brands PLC on OTCQX International Premier

I know that FINRA says that five-letter tickers ending in "Y" are for ADRs and those ending in "F" are for foreign listings other that ADRs (source), but how do I choose? What criteria should I use to choose one over the other? Which one do people usually buy — the F shares, or the Y shares?

Note: Imperial Brands PLC was arbitrarily chosen as an example, so answers need not be specific to it.

Personal Finance & Money Asked on November 21, 2021

1 Answers

One Answer

Looking at the volume answers your question, "which one do people usually buy"- the Y shares. They tend to have more liquidity, and more information is available about the stock since it is a US stock (the ADR itself). The F share is not - so it is subject to the foreign country's regulations only as far as information goes, might have higher commissions, and might be harder to trade. F shares often have much lower liquidity, meaning the price will buck up and down more. ADRs have more fees, since the bank creating the ADR wants its cut, but that fee may not be as much as the extra commission for the F share.

Schwab has a good explanation of the differences here, which mentions most of the above, and has a nice decision table. For the most part it seems like ADRs are the more "normal" choice, if they exist and have decent volume, but it varies.

Answered by Joe on November 21, 2021

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