Home Bias: Overcoming Biases Against Global Stock Investing
The U.S. stock market may offer the comfort of familiarity, but investing in both U.S. and international markets can benefit those with long-term perspectives.
Equities began the week edging higher following the Federal Reserve's announcement that it would buy corporate bonds under an emergency lending program.
Equities began the week edging higher following the Federal Reserve's announcement that it would buy corporate bonds under an emergency lending program.
Equities began the week edging higher following the Federal Reserve's announcement that it would buy corporate bonds under an emergency lending program.
Notes: The U.S. portion of the global stock market is represented by the MSCI USA Index; the non-U.S. portion of the market is represented by the MSCI World ex USA Index from 1969 through 1987 and the MSCI All Country World Index ex USA thereafter. Last observation: December 31, 2018. Sources: Vanguard, MSCI, and Thomas Reuters Datastream
Notes: U.S. and international stock market sector mixes are represented by the CRSP US Total Market Index and the FTSE Global All Cap ex US Index, respectively. Data as of December 31, 2018.
The Bottom Line
International stock markets can offer opportunities for U.S. investors. Shunning international stocks may increase a portfolio’s risk relative to that of the global stock market.