DEFINITION of 'Holding Company Depository Receipt - HOLDR'

A financial product created by Merrill Lynch and traded daily on the American Stock Exchange that allows investors to buy and sell a basket of stocks in a particular sector, industry or other classification in a single transaction.

BREAKING DOWN 'Holding Company Depository Receipt - HOLDR'

There is a wide range of HOLDRs, covering various segments of the market such as biotech, internet and Europe 2001. Each HOLDR represents individual ownership in the stocks underlying the HOLDR. The value of the HOLDR fluctuates with the change in value of the underlying stocks.

The benefit of this instrument is that it enables an investor to gain exposure to a segment of the market and diversify within that sector. To gain the same level of diversification without this vehicle, the investor would need to purchase each company individually, thus increasing the amount of commissions.

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