Home-country Bias Creates Disadvantage


    ‘Home country bias,’ the tendency to favour investments in domestic companies and securities, creates a long-term disadvantage in an investment portfolio, says a Segal Rogerscasey ‘Investment Insight.’ It says while an increasing number of investors have recognized that the healthiest equity portfolios are well-diversified by investment style, market capitalization, and geography, most Canadian investors still exhibit a ‘home-country bias.’ Investors can avoid the disadvantages created by such a bias by implementing a global equity structure and implementing a global equity structure need not be overly disruptive. Nino Boezio, its vice president, portfolio strategy and investment consulting, says “it is not necessary to replace all Canadian and non-Canadian equity managers within a portfolio because a number of money managers have begun to expand their offerings to include global equities. In some cases, expanding investment guidelines might be a simple solution. In other situations, it might make sense to maintain Canadian and non-Canadian managers and look to add global mandates selectively as opportunities arise.”