Home Country Bias


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.

BREAKING DOWN '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.

  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. Diversification

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

    A mutual fund that restricts its investment to the assets of ...
  5. Country Risk

    A collection of risks associated with investing in a foreign ...
  6. Trade Credit

    An agreement where a customer can purchase goods on account (without ...
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