Understanding the Equity Home Bias: Evidence from Survey Data

Norman Strong and Xinzhong Xu ()
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Norman Strong: University of Manchester

The Review of Economics and Statistics, 2003, vol. 85, issue 2, 307-312

Abstract: This study uses survey data of fund managers' views on prospects for international equity markets to shed light on why investment portfolios are significantly biased towards domestic equities. We find that fund managers from the United States, the United Kingdom, continental Europe, and Japan show a significant relative optimism towards their home equity market. Where institutional factors have largely failed to explain the puzzle, our evidence lends support to behavioral explanations of the bias. © 2003 President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Date: 2003
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The Review of Economics and Statistics is currently edited by Pierre Azoulay, Olivier Coibion, Will Dobbie, Raymond Fisman, Benjamin R. Handel, Brian A. Jacob, Kareen Rozen, Xiaoxia Shi, Tavneet Suri and Yi Xu

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