- Domestic bias is an investor’s preference to invest primarily in domestic stocks rather than diversify with foreign investment.
- Transaction costs, unavailability and unfamiliarity with foreign stocks were reasons why investors leaned towards domestic bias.
- Some generations may be more likely to show a home bias than others.
- Domestic bias affects individual investors as well as sophisticated and professional investors such as mutual fund managers.
- Investing in foreign stocks is now easier due to the availability of information as well as investment vehicles such as ETFs.