Investors’ tendency to allocate too much capital in home market must be questioned
The big winners have been US stocks, driven by outsized gains in the values of the region’s biggest tech firms in recent years
Most investors don’t typically get the opportunity to emulate the strategies of the world’s biggest asset managers. The recent announcement that the Norwegian sovereign wealth fund, the world’s biggest with $1.1-trillion, wants to increase its allocation to North American stocks should be a wake-up call for equity holders who ignore overseas shares — with investors from one nation in particular needing to pay attention.
The tendency for investors to allocate too much of their capital in their home markets is called domestic bias and is a well-known phenomenon. For UK investors who’ve stuck with indigenous equities in recent years, this proclivity has cost them dearly...
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