Describe the advantages & disadvantages of closed-end country funds (CECFs) relative to the American Depository Receipts (ADRs) as a means of international diversification.
CECFs can be utilized to diversify into exotic markets that are otherwise hard to access such as Turkey and India. Being a portfolio, CECFs also provide instant diversification. ADRs do not provide instant diversification; investors have to form portfolios themselves. Additionally, there are relatively few ADRs from emerging markets. The main disadvantage of CECFs is that their share prices act somewhat like the host country's share prices, decreasing the potential diversification benefits.