The problem of home bias is a hoary old chestnut in the world of investment. Pick a country, and find investors' equity holdings inordinately skewed to domestic securities, often far out of proportion to global benchmarks.
Hong Kong pension funds, for example, allocate on average 28% of their equities to local stocks, when Hong Kong comprises only 1% of global indices. This is hardly unique American institutions put up to 85% of their equities allocation into domestic stocks, when 50% would be more appropriate. Australia makes up 2% of a global equities index but superannuation funds invest over half their stock allocations domestically. And Japan, 8% of the global equities world, accounts for...