International Investing: Fidelity's Guide To Going Global

Investing internationally with Fidelity can be a great way to diversify your portfolio and balance risk. Fidelity offers international stock trading in 25 countries and the ability to exchange between 16 currencies. This allows investors to settle trades in either U.S. dollars or the local currency, providing flexibility and the potential to capitalise on foreign exchange fluctuations. It is important to note that Fidelity does not open accounts for new customers residing outside the United States, and there may be additional restrictions for customers residing in certain countries.

International stock trading

To get started with international stock trading through Fidelity, you will need to open a brokerage account. This is available to non-retirement accounts. Once you have an account, you can research international stocks using Fidelity's tools, which provide timely pricing information, news, independent research, and advanced charting.

When trading internationally with Fidelity, most common stocks and exchange-traded funds (ETFs) listed in the following markets will be available:

• Australian Stock Exchange
• Vienna Stock Exchange
• Euronext Brussels Stock Exchange
• Toronto Stock Exchange or Ventures Stock Exchange
• Euronext Paris Stock Exchange
• Frankfurt Stock Exchange
• Athens Stock Exchange
• Hong Kong Stock Exchange
• Irish Stock Exchange
• Italian Stock Exchange
• Tokyo Stock Exchange
• Mexican Stock Exchange
• Euronext Amsterdam Stock Exchange
• New Zealand Stock Exchange
• Warsaw Stock Exchange
• Lisbon Stock Exchange
• Stock Exchange of Singapore
• JSE Limited (Johannesburg Stock Exchange)
• Bolsa de Madrid (Madrid Stock Exchange)
• Stockholm Stock Exchange
• London Stock Exchange

It is important to note that international stocks must be bought and sold in the same market. For example, shares purchased in Germany cannot be sold in France, even if the company trades on multiple exchanges.

International stock commissions, currency exchange fees, and other price requirements

International trading with Fidelity comes with a variety of costs, including commissions and fees. Here is a breakdown of the price requirements for international stock commissions, currency exchange fees, and other associated costs:

International Stock Commissions:

When trading international stocks with Fidelity, there is a commission charged on the trade, which covers clearing and settlement costs, as well as local broker fees. The commission rates vary depending on the market and are charged in the local currency.

Currency Exchange Fees:

Fidelity allows you to settle international trades in the local currency or U.S. dollars. If you choose to settle in U.S. dollars, a foreign currency exchange fee will be incurred. This fee is based on the size of the currency conversion and is charged when the foreign currency exchange executes.

Other Price Requirements:

In addition to the above, there may be other fees specific to certain foreign exchanges, referred to as "Other Fees," which will be identified at the time of the trade. These can include stamp duty, transaction levies, and trading fees.

Furthermore, there may be additional fees or taxes charged for trading in specific markets, and this list of markets and associated fees is subject to change without notice. These fees are included in the Estimated Commission section of the Trade Verification page and/or on your trade confirmation.

• Hong Kong Transaction Levy: 0.004% of the principal per trade.
• United Kingdom PTM Levy: 1 GBP per trade for principal amounts over 10,000 GBP.
• France Financial Transaction Tax: 0.30% of the principal on purchases of French securities, including ADRs.
• Currency exchange fees for converting between U.S. dollars and foreign currencies.

It is important to carefully review all the associated costs before engaging in international stock trading to ensure you understand the full scope of the price requirements.

International equity funds

• Fidelity International Index Fund (FSPSX): This fund tracks an international stock index and provides diversified exposure to developed markets outside of the United States. It aims to replicate the performance of the index, offering broad international equity exposure.
• Fidelity Total International Equity Fund (FTIEX): The FTIEX fund seeks to provide investors with capital appreciation by investing primarily in non-U.S. equity securities. It may be suitable for investors seeking international diversification and exposure to global markets.

Benefits of International Equity Funds

• Geographical Diversification: International equity funds allow you to invest in companies and markets from different countries and regions, helping you diversify your portfolio geographically. This diversification can potentially reduce the impact of country-specific or regional economic downturns.
• Currency Diversification: Investing in international equity funds gives you exposure to different currencies. This can be beneficial as it allows you to capitalize on foreign exchange fluctuations and potentially benefit from the strength of other currencies relative to the U.S. dollar.
• Access to Global Growth Opportunities: International equity funds provide access to companies and markets with strong growth potential. By investing in these funds, you can tap into the growth of emerging markets and economies, as well as developed markets outside of the United States.

Key Considerations

• Increased Risk: Investing in international markets carries higher risks than investing solely in U.S. markets. These risks include political and economic instability, currency fluctuations, and the potential for greater volatility in emerging markets.
• Currency Exchange Rates: While currency diversification can be beneficial, it's important to monitor exchange rates. Changes in currency values can impact your investment returns, either positively or negatively, depending on the exchange rate movements.
• Taxes and Fees: When investing in international equity funds, be mindful of additional taxes, fees, and transaction costs. These may include withholding taxes, currency exchange fees, and other specific fees associated with foreign exchanges.

In summary, international equity funds offered by Fidelity provide a valuable opportunity to diversify your portfolio globally and gain exposure to foreign markets. By investing in international stocks and funds, you can access growth potential, capitalize on currency fluctuations, and reduce concentration risk. However, it's important to carefully consider the increased risks, understand the fees involved, and ensure that international investing aligns with your investment goals and risk tolerance.

Foreign currency wire transfers

Fidelity offers foreign exchange wire services in more than 20 currencies and at competitive rates. They can wire the local currency to the requested overseas location, then debit the corresponding U.S. dollar amount directly from your Fidelity brokerage account. Or, they can take delivery of the foreign currency, convert it to U.S. dollars, and credit the proceeds to your Fidelity brokerage account.

To transfer foreign currency from your Fidelity account to another institution, use the Outgoing Foreign Currency Wire Form. You'll need to contact a Fidelity International Trader at 800-544-2976 to complete the transaction.

To transfer foreign currency to your Fidelity account, start the process at the financial institution that holds the currency. Review the Incoming SWIFT Wire Instructions. Use this page to select the institution you're transferring from and the desired country/currency.

To set up Outgoing Currency Wire Standing Instructions on your account for future transfers using the same currency and account, complete the Outgoing Foreign Currency Standing Instruction Form and return it to your local Investor Centre, either in person or by mail, with a Medallion Signature Guarantee. Once you've established standing instructions, call the International Trading Team at 800-544-2976 to send the currency.

International stock performance

International stocks are currently undervalued compared to US stocks, with lower price-to-earnings ratios. This means that investing in international stocks could be a good way to balance your portfolio and take advantage of potential growth opportunities.

Fidelity researchers expect international stocks to outperform US stocks over the next 20 years, with the biggest opportunities in emerging markets, particularly Chinese companies. However, there are also pockets of potential in developed markets.

International stocks can be more volatile than US stocks due to increased risks, such as adverse issuer, political, market, or economic developments, which are magnified in emerging markets. These risks need to be carefully considered by investors.

When investing internationally, it is important to diversify your portfolio and not put all your eggs in one basket. Fidelity offers a range of international equity funds that can help investors gain exposure to different regions and countries. For example, the Fidelity® Diversified International Fund (FDIVX) seeks long-term capital growth by investing primarily in the markets of the MSCI EAFE Index, while the Fidelity® Emerging Markets Fund (FEMKX) is designed for growth-oriented investors seeking emerging-markets exposure.

In addition to international equity funds, investors can also gain international exposure through exchange-traded funds (ETFs) and mutual funds. ETFs can be traded intraday like stocks and offer exposure to specific regions or countries, while mutual funds are actively managed and can provide more flexibility in buying and selling as opportunities shift.

Frequently asked questions