Borders Fading Faster for Average Investor

BOSTON (TheStreet) -- Count Robert Lutts, president and chief investment officer of Boston-based Cabot Money Management, among those who think smart investors looking overseas can do better than the market-basket approach of international ETFs.

"I think the brokers are starting to grow and put more emphasis in these areas," he says. "But you still have to be careful."

China's health care sector is ripe for individual investment, an adviser says, but the possibility should still be approached with caution.

Lutts' advice for cracking into into international markets on a stock-by-stock basis is to "use a very well-recognized, large broker that has a top foreign desk." Expertise and competitive commissions need to be a consideration, he says.

In a significant sign of falling borders, customer demand has prompted Fidelity Investments to offer more options to investors looking for opportunities in foreign securities and currency trading.

Last October, as a supplement to its trading capabilities with roughly 45 foreign markets, Fidelity launched an online option for retail investors with direct trading access to 12 countries.

As part of this enhanced capability, the firm has added real-time data, third-party research and charting functionality similar to what would be available for domestic securities. Traders have the option of settling in U.S. dollars or the foreign currency, and all trades are reviewed instantly for regulator compliance before being transmitted.

"Trade activity is still relatively light compared to our domestic trading, obviously, but you definitely see more interest, month over month, with customers trying to find out what they can do and what markets they have access to," says Gregg Murphy, who oversees Fidelity's retail stocks and options trading.

The dozen countries offered via Fidelity's online trading desk are Australia, Belgium, Canada, France, Germany, Hong Kong, Italy, Japan, Netherlands, Norway, Portugal and the U.K. Developed markets were chosen over emerging markets such as China and Brazil because of the added volatility and regulatory issues, complexities that make them less than ideal for a streamlined, online approach.

Though many customers do, nevertheless, inquire about emerging and frontier markets, our neighbors to the north dominate actual trading.

"Due to proximity and customer awareness, Canada always has a pretty strong following," Murphy says, noting mining and natural resource companies as popular plays. "You get customers who subscribe to Canadian investing newsletters so they get a lot more information on Canadian securities than they might some other foreign markets. Right now you also see a lot of interest in Australia, because of how their currency is doing."