Visual Capitalist: How Investors Allocation Their Investments, By Country

How Investors Allocate Their Portfolios Around the World

A recent analysis from Goldman Sachs reveals how investors across major countries distribute their money across U.S., domestic, and global markets—and the results highlight a striking trend: home bias remains a powerful force shaping investor behavior.

The Dominance of Home Bias

Investors around the world tend to favor assets from their own country, even when global opportunities offer strong returns. This tendency is particularly pronounced in the United States and Japan.

• U.S. investors keep 78% of their equity portfolios at home, despite having access to the world’s most diverse financial markets.

• Japanese investors show a similar pattern, allocating 78% of their equity holdings domestically.

Countries That Look Abroad

Not every nation sticks close to home. Several countries lean heavily on U.S. equities as part of their strategy:

• Norway: 48% of its equity allocation is in U.S. stocks, with only 12% held domestically.

• Canada: Nearly half (45%) of its equities are U.S.-based, reflecting close economic ties.

• United Kingdom: Domestic equities make up just 19% of portfolios—likely influenced by years of weaker market performance and ongoing post-Brexit uncertainty.

Bond Markets Show Even Stronger Home Bias

While some countries diversify their equity exposure, bonds tell a different story. Across the board, investors overwhelmingly prefer domestic fixed-income markets:

• Japan leads the pack, with 80% of bond investments held at home.

• European investors also follow this trend, allocating 69% of their bond holdings domestically.

For those who do diversify internationally, Switzerland stands out—33% of its bond allocation goes into U.S. bonds, drawn by higher yields and currency stability.

Why It Matters

Understanding home bias and global allocation patterns offers valuable insights for investors looking to build more balanced, globally diversified portfolios. While familiarity can feel safe, opportunities abroad may offer stronger returns and better risk management.

Read Full Article: https://www.visualcapitalist.com/how-investors-allocate-their-investments-by-country/