spaines
Appraising home bias exposure

Appraising home bias exposure

22-04-2020 | From the field

The home market bias is one of the clearest examples of behavioral biases among investors. It refers to the common preference of investors for a sizable allocation to their home market, even though this is generally suboptimal from the perspective of international diversification. One might expect this bias towards one’s home market to become smaller over time, in light of rising globalization.

  • David Blitz
    David
    Blitz
    Head of Quant Research

This study1 by FTSE makes an assessment of the current home bias for five large pension fund markets. The home market bias is found to be strongly present in all of them, with Australian investors topping the chart with an average allocation to Australian equities of 52% (versus 2% in the global equity index). 

UK and Japanese investors have over one third of their equity portfolio in the home market, and Canadian investors over 20%. US investors also have a home market bias, although this appears less pronounced given that US stocks already represent over 50% of the global equity index. In sum, home market bias continues to be a deeply entrenched phenomenon.

1 FTSE, October 2019, 'Appraising home bias exposure’, white paper.

Manténgase al día de las últimas perspectivas sobre inversión cuantitativa
Manténgase al día de las últimas perspectivas sobre inversión cuantitativa
Suscríbase
From the field
From the field

Nuestros investigadores publican multitud de informes basados en sus propios estudios empíricos; también siguen los análisis cuantitativos que hacen los demás. Comentarios de nuestro responsable de análisis cuantitativo para renta variable, David Blitz, sobre publicaciones externas de gran relevancia.

Artículos relacionados
Los temas relacionados con este artículo son: