Anthony Rayner: Better the devil you know?

Limit investment prejudices

clock • 3 min read

Investment home bias is psychological not rational, argues Anthony Rayner, while corporate governance and geopolitical risk are certainly not the preserve of overseas markets - as Brexit has illustrated all too well

It is well documented investors have a home bias, regardless of their location globally. Understanding why this bias exists is relevant for all investors who are looking to diversify - especially those whose home market is small, concentrated or very domestically oriented. Canada and Australia are two fairly extreme examples. They are overwhelmingly dominated by financials and resources, while their stockmarkets are both below 5% of global market capitalisation. Canadian and Australian investors typically, however, hold much more than half of their exposure in domestic stockmarkets. The ...

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