Home Biased: A Case for More Indexing

2 Pages Posted: 11 Nov 2019

Date Written: September 25, 2019

Abstract

Home Bias refers to the tendency to invest more heavily in one’s domestic equity market than global market-value proportions would suggest. Whether or not home-biased investing makes sense, the fact is that people in pretty much every country do it. This article addresses the question of whether if everyone’s doing it, does it matter? Or if everyone equally over-weights their domestic market does it all wash out, with the over-weights cancelling out the under-weights? We propose a simple model to answer this question, which produces surprising results.

Keywords: home bias, index investing, global markets, supply and demand, macro investing

JEL Classification: B12, B16, B20, C00, C10, C11, C50, C57, C73, D03, D81, D83, E00, G00, G02, G11, G12, G14, G17, G23

Suggested Citation

White, James and Haghani, Victor, Home Biased: A Case for More Indexing (September 25, 2019). Available at SSRN: https://ssrn.com/abstract=3459557 or http://dx.doi.org/10.2139/ssrn.3459557

James White (Contact Author)

Elm Partners ( email )

1630 Willow View Drive
PO Box 1417
Wilson, WY 83014

Victor Haghani

Elm Partners ( email )

1630 Willow View Drive
PO Box 1417
Wilson, WY 83014

HOME PAGE: http://www.elmfunds.com

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