Understanding the fundamentals of BDRs

BDRs, or Brazilian Depositary Receipts, are certificates that represent shares issued by foreign companies, but which are traded on the Brazilian financial market.

This financial instrument allows Brazilian investors to participate in the growth of large global companies.

Without having to open accounts abroad or deal with the complexities of currency conversion.

Before deciding to invest in BDRs, it is crucial to evaluate not only the potential benefits but also the associated risks.

What are BDRs?

BDRs are issued by Brazilian depository institutions, which acquire shares from foreign companies and then issue the corresponding certificates on the Brazilian market.

Each BDR It can represent a fraction or a set of shares in the foreign company, depending on how that company's BDR program was structured.

Why invest in BDRs?

Investing in BDRs offers the diversification opportunity portfolio, as it allows access to markets and sectors not available on the Brazilian stock exchange.

Furthermore, investors can benefit from the economic growth and appreciation of companies from different parts of the world, increasing the returns on their investment.

Advantages of BDRs

• Access to international companies without leaving the Brazilian market.
• Portfolio diversification through exposure to different economies.
• Ease of trading in reais.
• Potential for appreciation depending on the global performance of companies.

How BDRs work in the financial market

BDRs, or Brazilian Depositary Receipts, are certificates which represent shares of foreign companies, but which are traded on stock exchanges in Brazil, such as B3.

This means they allow Brazilian investors access to the shares of large global companies without having to open accounts with international brokers or deal with direct currency conversion.

Issuance Process

For a BDR to be made available, a depository institution in Brazil, such as a bank purchase shares of foreign companies and issues the respective BDRs.

These are then sold to Brazilian investors, who now have economic rights similar to those of those who own the shares directly, including dividends, according to the established conversion.

Advantages of Investing in BDRs

• Diversification: Allowing investments in large global companies, BDRs help to diversify the portfolio.
• Easy access: It is simpler and less bureaucratic than investing directly abroad.
• Dividends: Investors receive dividends, already converted into reais, from the foreign companies represented.

Benefits and risks of investing

Invest in BDRsit can be a good way to diversify your portfolio, while also bringing some challenges.

Let's explore the benefits and risks associated with this type of investment, focusing on how they may impact your decision to invest.

Here are some helpful resources to get started:

• B3
• IRS

Benefits of investing

• Access to global companies: BDRs allow Brazilian investors to buy shares in large international companies without leaving B3, the Brazilian stock exchange. This opens up a range of possibilities for those seeking exposure to foreign markets.
• Portfolio diversification: Investing in BDRs is a way of diversifying investments, reducing risk by not concentrating all resources in a single market or sector.
• Convenience and simplicity: Buying BDRs is as simple as purchasing shares in Brazilian companies, without the need to deal with currency conversion or opening an account with international brokers.
• Dividends: As with shares, BDR investors are entitled to receive dividends distributed by foreign companies, although taxes are levied on these amounts.

Summary

BDRs represent an innovative and strategic form of investment, accessible to Brazilian investors who wish to expand their operations beyond national borders.

With the possibility of diversifying portfolios and directly accessing the economic performance of companies around the world.

BDRs have established themselves as an attractive option in the investment universe.