International equities have been gaining attention in 2025. As discussed in a previous blog post, international stocks have been outperforming U.S. stocks so far this year. The S&P ADR Index Series is one of the S&P Dow Jones Indices offerings that focuses on international markets through U.S.-listed securities.

American depositary receipts (ADRs) are securities that represent shares of non-U.S. companies that are held by a U.S. depositary bank and are listed on U.S. stock exchanges. They provide U.S. market participants access to foreign stocks, but incur fees different from those of their local listings. ADRs are suitable for direct indexing and could be of interest to those who don’t have easy access to foreign stock markets.¹

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One might wonder if indices that measure these type of securities perform similarly to those that measure stocks listed on foreign exchanges. Compared to the S&P Global BMI Series, the S&P ADR Indices differ in their performance (see Exhibit 1). As not every international stock has an ADR, the number of constituents and the market capitalization of their indices has tended to be less, as illustrated by Exhibit 2. ADR indices have tended to include fewer small-cap companies, as evidenced by a higher mean and median float-adjusted market cap.

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Additionally, due to the lower number of constituents, the S&P ADR Composite Index presented a higher concentration in its top 10 constituents than the S&P Global Ex-U.S. BMI. Notably, as shown by Exhibit 3, both indices share some companies as their top constituents.

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Sector-wise, the weight in Information Technology stocks in the S&P ADR Composite Index was almost twice that of the S&P Global Ex-U.S. BMI (24.1% versus 12.3%) as of May 31, 2025, making the former more concetrated in growth stocks, which might tend to perform better in bull markets, but may underperform in lower growth macroeconomic environments. On the other hand, Exhibit 4 also shows that the S&P Global Ex-U.S. BMI had a higher weight in the Industrials sector.

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Due to variations in their country classification, the country composition of these indices differs. For instance, the S&P ADR Composite Index had more weight in the U.K. and Taiwan, while the S&P Global Ex-U.S. BMI had a bigger proportion of Japanese companies.

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However, despite the differences in their composition and performance, historically S&P ADR Indices have shown a high correlation with their foreign-listed equities index counterparts, particularly over the long term, as Exhibit 6 shows.

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In conclusion, while S&P ADR Indices differ from international indices in composition, over the the long run they have compared closely in their performance and moved in a similar trend. Based on that, and after weighting the costs and benefits of ADRs, these indices can be used to gain insight into foreign equities.

¹ For further information about these securities, please see the investor bulletin published by the Securities and Exchange Commision.

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