Equity home bias puzzle

The Home bias puzzle is the term given to describe the fact that individuals and institutions in most countries hold only modest amounts of foreign equity. This is puzzling since observed returns on national equity portfolios suggest substantial benefits from international diversification. The home bias in equities is a behavioral finance phenomen and it was first documented by French and Poterba (1991) and Tesar and Werner (1995).

Equity home bias puzzle

The Home bias puzzle is the term given to describe the fact that individuals and institutions in most countries hold only modest amounts of foreign equity. This is puzzling since observed returns on national equity portfolios suggest substantial benefits from international diversification. The home bias in equities is a behavioral finance phenomen and it was first documented by French and Poterba (1991) and Tesar and Werner (1995).