The danger of home country bias and how to avoid it

Home country bias occurs when investors concentrate their portfolios in shares and bonds from their home country. For example, while the UK stock market now represents only 3.2% per cent of the value of global equity markets (in 2006, it was 10.4%), British investors tend to allocate considerably more than this to UK stocks. It is a phenomenon that can often be detrimental to investment returns. Especially as the UK has lagged other world market in recent years.

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