As you may know, as of October 2020, the rules for investing in BDRs have changed. Previously, BDRs were only accessible by qualified investors, who had more than R$1 million invested, but now they can be acquired by almost anyone. Brazilian Depositary Receipts (BDRs) are certificates for securities issued by publicly-held companies, or similar companies, based abroad, and generally issued by a depository institution in Brazil.
Given this dramatic change, you must be asking yourself: should I purchase BDRs or invest in US stocks directly? What are the differences between buying BDRs or investing in stocks via a US broker-dealer?
In this post, we’ll go over some of the key advantages of investing in the United States with Passfolio:
Through Passfolio Securities, you can buy as little as $1 of any stock, because we allow fractional share investing (please see more info here). With BDRs, on the other hand, you generally have to use the standard share amount of 10 and, in some cases, the minimum investment required may be high.
Currently, only about 500 BDRs are available. Through Passfolio Securities, you have access to more than 3,800 stocks, ETFs and REITs from the American market. How about that?
Generally, the price of a BDR is higher than the price of a company’s stock in the American market in US dollars. The higher spread of BDRs exists because of the fees charged by the banks that issue the BDRs. Moreover, the American market has relatively higher liquidity, so it’s easier for investors to buy or sell their assets at a desired price.
A lot of BDRs charge up to 5% of the amount received in dividends. At Passfolio Securities, you have access to dividend-paying stocks where no fee is charged by Passfolio on the dividends received. Keep in mind that not all stocks pay dividends and that other charges may apply.
With Passfolio Securities, you can start investing in US stock with as little as $1 - all with no commission fees¹². We make investing in US stocks accessible and even accept local deposit methods such as TEDs.
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Investing involves risk, including the risk of loss.
¹ Please see our fractional shares disclosure.
² Securities less than $5 cost $0.02/share. Please see our disclosures on other charges.
Please read important legal disclosures that apply to your relationship with Passfolio.
Passfolio is a San Francisco fintech company democratizing investment opportunities by creating a unified, global, and borderless investment market starting with the United States Stock Market.
Securities less than $5 cost $0.02/share. Please see our disclosures on other charges.
Please see the terms of our referral program.
Please see our fractional shares disclosure.
Please read important legal disclosures that apply to your relationship with Passfolio.
Investing involves risk, including possible loss of principal.
Securities and cryptocurrencies are very different types of assets.
Cryptocurrencies are not securities.
Purchasing cryptocurrencies comes with a number of risks. Please read Passfolio Financial Cryptocurrency Risk Disclosure.
Currency and cryptocurrency exchange services provided by Passfolio Financial LLC (“Passfolio Crypto”), a US Money Services Business registered with FinCEN. Passfolio Financial LLC is not a broker dealer. Cryptocurrencies are not protected by either FDIC or SIPC. Securities products and services offered to self-directed investors through Passfolio Securities LLC Member FINRA / SIPC. Passfolio Securities, LLC does not provide cryptocurrency-related services. Passfolio Securities LLC is a member of SIPC, which protects securities customers of its members up to $500,000 (including $250,000 for claims for cash). Explanatory brochure available upon request or at www.sipc.org.
Passfolio is the brand name of Panchain, Inc. Passfolio Securities LLC and Passfolio Financial LLC are fully-owned subsidiaries of Panchain, Inc.
To purchase securities using cryptocurrencies, you must first convert it into U.S. Dollars using Passfolio Financial LLC. You must then move the U.S. Dollar proceeds to your brokerage account at Passfolio Securities LLC where you can use it to buy securities.
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According to CVM's Legal Opinion No. 33, dated September 30, 2005, Passfolio contracted RB Capital Investimentos Distribuidora de Títulos e Valores Mobiliários Ltda. ("RB Investimentos"), a Brazilian securities distributor duly authorized by the Central Bank of Brazil and the CVM, through which RB Investimentos makes Passfolio's services available to investors resident, domiciled or incorporated in the Federative Republic of Brazil. The services provided by RB Investimentos should not be understood as an offering of securities directed to such investors. Although RB Investimentos has been hired to provide Passfolio's services, Passfolio offers its services exclusively in the United States and under the rules and regulations applicable in that country. As these services are investments made directly in the United States through Passfolio, they are not registered with or subject to the supervision of the CVM or any other Brazilian regulatory agency, so the investor must have knowledge of the language and local regulation. Investors resident, domiciled or incorporated in the Federative Republic of Brazil who have become or will become clients of Passfolio through RB Investimentos may contact the following e-mail addresses: suporte@passfolio.us / contato@rbinvestimentos.com
Investors should consider the investment objectives, risks, and charges and expenses of an Exchange Traded Fund ("ETF") carefully before investing. Before investing in any ETF, you should consider its investment objective, risks, charges and expenses. Contact us at support@passfolio.us for a prospectus containing this information. Read it carefully. ETFs are subject to market fluctuation and the risks of their underlying investments. ETFs are subject to management fees and other expenses. ETF shares are bought and sold at market price, which may be higher or lower than their NAV, and are not individually redeemed from the fund. Investment returns will fluctuate and are subject to market volatility, so that an investor's shares, when redeemed or sold, may be worth more or less than their original cost. ETFs are subject to risks similar to those of stocks. Some specialized exchange-traded funds can be subject to additional market risks. Leveraged and inverse exchange-traded products are not designed for buy and hold investors or investors who do not intend to manage their investment on a daily basis. These products are for sophisticated investors who understand their risks (including the effect of daily compounding of leveraged investment results), and who intend to actively monitor and manage their investments on a daily basis.
Be sure to consider your own financial situation, perform thorough research, and consult with a qualified tax professional before making any investment decisions concerning REITs. Investments in REITs and other real estate securities are subject to similar risks as direct investments in real estate. The real estate industry is particularly sensitive to economic downturns.
Where an investment is denominated in a currency other than the investor’s currency, changes in rates of exchange may have an adverse effect on the value, price of, or income derived from the investment.
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Passfolio Securities, LLC
Member FINRA/SIPC
V.09 11/24/2020
