Home Country Bias

AAA

DEFINITION of 'Home Country Bias'

Investors' natural tendency to be most attracted to investments in domestic markets. Investors tend to focus more on their home markets and the companies that do business within these markets because they are familiar with them.

INVESTOPEDIA EXPLAINS 'Home Country Bias'

Investors who exhibits home country bias with their investment allocations tend to hold optimistic expectations about the domestic market and are either pessimistic or indifferent about foreign markets. These investors do not strongly diversify their portfolios with international market securities, which could become a weakness for their portfolios if their home-country suffers serious economic decline.

RELATED TERMS
  1. Systematic Risk

    The risk inherent to the entire market or entire market segment. ...
  2. Bias

    Biases are human tendencies that lead us to follow a particular ...
  3. Country Risk

    A collection of risks associated with investing in a foreign ...
  4. Diversification

    A risk management technique that mixes a wide variety of investments ...
  5. Single-Country Fund

    A mutual fund that restricts its investment to the assets of ...
  6. Welfare Capitalism

    Definition of welfare capitalism.
Related Articles
  1. Insurance

    Investing Beyond Your Borders

  2. Here we look at the major fund categories that exist for investors seeking international opportunities, as well as the advantages and disadvantages of these funds.
    Investing Basics

    Broadening Your Portfolio's Borders

  3. Investing Basics

    Why Country Funds Are So Risky

  4. Mutual Funds & ETFs

    Mitigate Your Equity Risk

Hot Definitions
  1. Capitulation

    When investors give up any previous gains in stock price by selling equities in an effort to get out of the market and into ...
  2. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  3. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  4. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  5. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  6. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
Trading Center