Investments in GDRs have delivered negative 52% average return on investment. Information technology, media and consumer staples companies were the major underperformers. Last year GDRs were a good option due to rising local markets, this year this route seems to have soured for global investors

According to a report released today by one of the largest research houses in India, out of 40 global depository receipts (GDRs) issued by Indian companies in 2010, investors have lost money in 85% of the issues, with four out of five issues giving a negative return of 35% or more. As on 15th September, the average return on investment (a measurement of the difference in the offer price and the market price) by all the GDRs issued in 2010 was a negative 52%. The underperformance is significant when compared to the average return of a negative 7% by the S&P CNX 500 during the same period. The report was released by CRISIL Research today.

Indian companies have been the most active GDR issuers, accounting for about 68% of the total listed GDRs on the Luxembourg Stock Exchange as of December 2010. During 2010, Indian companies, predominantly small- and mid-cap companies, raised around Rs5,680 crore ($1.20 billion) through the GDR route. For more visit: Moneylife.in

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