Equity home bias puzzle

In finance and investing, the Home bias puzzle is the term given to describe the fact that individuals and institutions in most countries hold only modest amounts of foreign equity, and tend to strongly favor company stock from their home nation. This finding is regarded as puzzling, since ample evidence shows equity portfolios obtain substantial benefits from diversification into global stocks. Maurice Obstfeld and Kenneth Rogoff identified this as one of the six major puzzles in international macroeconomics.