A thrilling development within the Canadian investment product space has Bank of Montreal step into an emerging market. The financial behemoth has revealed its plans to launch currency-hedged global stocks through Canadian depositary receipts (CDRs). This move positions BMO as the second Canadian bank to introduce this innovative financial instrument, following in the footsteps of the Canadian Imperial Bank of Commerce (CIBC), which debuted CDRs in 2021. This new offering allows Canadian investors to gain exposure to popular global stocks, while simultaneously mitigating risks associated with currency volatility.
What Are CDRs and How Do They Work?
It is important to understand the mechanics of CDRs and their significance in the world of finance before going into the details of BMO’s new offerings. CDRs are investment products that allow Canadian investors to invest in foreign stocks, with their performance being tied to the underlying stocks but traded in Canadian dollars. In essence, they represent foreign shares traded on the Canadian stock market, thus it is easier for Canadian investors to access international markets without having to deal with the complexities of foreign exchanges.
The CDR is designed in such a manner that the price of the CDR represents the price of the underlying stock, yet it is priced and traded in Canadian dollars. Investors get global company exposure, but with a currency hedge to boot. Such a hedge cushions the investor from fluctuations in the exchange rate-the more important characteristic in a world where the Canadian dollar has taken a beating from the U.S. dollar in recent years.
The number of shares increases when the Canadian dollar strengthens and decreases when the loonie weakens. This makes CDRs an attractive option for those looking to invest in global equities without exposing themselves to significant currency risk.
BMO Enters the CDR Market
BMO takes this step in advancing its goal to offer unique financial products as part of the move into the CDR market. The bank is launching five new CDRs, where investors can obtain a stake in the most prominent and high-performance stocks listed on the European and Japanese markets. They will be available for listing on the Cboe Canada exchange, offering the Canadian investor with an easy opportunity to purchase such international equities without dealing with currency differences.
The CDRs BMO plans to issue will include brands such as Mercedes-Benz Group AG and Nestlé SA, which are based in Europe. These products will be available for trading starting on February 6, 2025. Beyond this, there will be Toyota Motor Corp., Honda Motor Corp., and Nintendo Co. – all of these CDRs will start trading starting from February 10, 2025. All of these CDRs will be priced at around $10 and thus available to most investors.
David Hudson, managing director at BMO Global Asset Management, is excited by the growth prospect of the CDR market: “It reminds me of ETFs in their early days,” he said. “I feel that CDRs mark the beginning of a fantastic innovation cycle in the financial industry, and this will grow substantially in the next few years.”. He further stressed that the existence of more players in the market would encourage further innovation, which he believes will benefit both investors and the financial sector as a whole.
Position of CIBC in the CDR Market
BMO has entered the CDR space following the Canadian Imperial Bank of Commerce, which launched the product in July 2021. CIBC’s program initially included CDRs for popular U.S.-listed companies such as Alphabet Inc., Amazon.com Inc., Apple Inc., Netflix Inc., and Tesla Inc. These listings were available on Cboe Canada and quickly gained traction among Canadian investors looking to diversify their portfolios and gain exposure to international markets.
CIBC has since expanded its CDR offerings, including a range of European listings. The bank’s CDRs for Mercedes-Benz, Allianz SE, BMW, SAP SE, and Siemens AG began trading on January 31, 2025. By the end of 2024, CIBC had amassed over $8.3 billion in assets under management across its CDR products, with more than $75 billion in traded volume. This fantastic performance has repositioned CIBC as one of the best players in the CDR market, and indeed, it would appear that this bank is eyeing substantial potential for growth from this product area.

The Currency Hedge: Key Advantage
The currency hedge built into CDRs is one of the main differentiators that set them apart from other investment products. Because, as David Hudson noted, the Canadian dollar has traded at multiyear lows primarily because of the strength of the U.S. dollar and external factors such as tariff threats, such a scenario would call for a good environment to launch CDRs, as the products can throw a cover over the volatility of exchanging rates for Canadian investors.
BMO’s CDR program will include a cost of up to 60 basis points to carry out the hedge in the currency, ensuring the investors are well-covered from unfavourable exchange rate movements. CIBC averages a fee of 60 basis points for U.S.-listed CDRs while its global CDRs will attract slightly higher fee around 80 basis points. These fees are generally at par with other markets, providing a relatively affordable tool for currency hedging purposes by investors.
Future of CDRs in Canada
Looking ahead, the introduction of BMO into the market is bound to have profound changes in the future of Canada’s financial scenario. Huge successes with this have led to other banks and financial institutions opening to the opportunities associated with providing currency-hedged access to global equities. According to Hudson, there is much growth potential in such a space, and optimism in this is attributed to many industry observers who view CDRs as a valuable tool for Canadian investors with a desire for diversification of portfolios and better management of risk.
As more investors look beyond Canadian borders to global markets, products like CDRs will likely become increasingly popular. The ability to invest in high-growth international companies, while minimizing currency risk, is a compelling proposition for both individual investors and institutional players.
With time, the list of companies from different regions and industries added to the CDR lineup will widen the range of investment options. This will make building diversified, well-rounded portfolios easier for Canadian investors.
5 Frequently Asked Questions About BMO’s Currency-Hedged Global Stocks CDRs
What are Canadian depositary receipts (CDRs)?
CDRs are investment products that allow Canadian investors to invest in foreign stocks, with the performance of these stocks reflected in Canadian dollars. They are designed to offer exposure to global companies while mitigating the risks associated with currency fluctuations.
What are the benefits of investing in CDRs?
The main benefit of investing in CDRs is the ability to gain exposure to international stocks while minimizing currency risk. CDRs are also traded in Canadian dollars, which makes them accessible to investors without the need to navigate foreign exchanges.
What companies will BMO’s CDRs feature?
BMO’s CDRs will feature five global companies: Mercedes-Benz Group AG and Nestlé SA (listed in Europe) starting on February 6, 2025, and Toyota Motor Corp., Honda Motor Corp., and Nintendo Co. (listed in Japan) starting on February 10, 2025.
How are CDRs different from ETFs?
While both CDRs and ETFs allow investors to gain exposure to a variety of stocks, CDRs are specifically designed to offer exposure to foreign stocks while being priced in Canadian dollars and hedged against currency risk. ETFs, on the other hand, can include domestic and foreign stocks and do not necessarily have the same currency-hedging mechanism.
What is the fee for BMO’s CDRs?
BMO’s CDR program will have a fee of up to 60 basis points to manage the currency hedge. This fee is designed to protect investors from the risks associated with currency fluctuations, ensuring that their investments remain stable even in volatile markets.
As BMO enters the currency-hedged CDR market, Canadian investors now have an additional option for gaining exposure to global stocks while mitigating the risks associated with currency volatility. With growing interest in these products, the next few years could witness significant developments in this exciting new market segment.


I am Aparna Sahu
Investment Specialist and Financial Writer
With 2 years of experience in the financial sector, Aparna brings a wealth of knowledge and insight to Investor Welcome. As an accomplished author and investment specialist, Aparna has a passion for demystifying complex financial concepts and empowering investors with actionable strategies. She has been featured in relevant publications, if any, and is dedicated to providing clear, evidence-based analysis that helps clients make informed investment decisions. Aparna holds a relevant degree or certification and is committed to staying ahead of market trends to deliver the most up-to-date advice.