Understanding the Equity Home Bias: Evidence from Survey Data

Abstract
This study uses survey data of fund managers? views on prospects for international equity markerts to shed light on why investment portfolios are signnificantly biased towards domestic equities. We find that fund managers from the US, the UK, Continental Europe, and Japan show a significant comparative optimism towards their home equity market. Where institutional factors have largely failed to explain the equity home bias puzzle, our evidence lends support to behavioural explanations of the bias.