The comfort trap of 'home bias'
Home bias is the very human habit of investing in what we recognise. We bank with the big four, we shop at the big two supermarkets, we've watched those share prices for years. Familiarity feels like safety.
But familiarity isn't information. Of every $100 of listed company value in the world, only about $2 sits in Australia. The other $98 is offshore — and holding none of it isn't a neutral choice. It's a very concentrated bet on one economy of roughly 27 million people.
Owning only Australian shares isn't playing it safe. It's putting almost everything on one economy and, largely, on two industries.
The 'two-trick pony' sector problem
More than half of the Australian share market sits in just two areas: banks and mining. That's a market built on interest rates, house prices and the price of iron ore.
What's missing matters just as much. There is no Australian equivalent of the world's cloud computing platforms, semiconductor manufacturers (the companies that make computer chips), global oncology research, medical device makers or worldwide payment networks. Those are entire growth engines you can only reach by looking offshore.
~50%+
More than half our market sits in banks and mining. Global markets spread across eleven major sectors.
What the two look like side by side
| Australian shares only | Australian plus global | |
|---|---|---|
| Share of world market | About 2% | About 100% |
| Main drivers | Interest rates, housing, commodities | Many economies and industries |
| Sector coverage | Heavily banks and mining | All eleven major sectors |
| Access to global tech & healthcare | Very limited | Yes |
| Currency exposure | Australian dollar only | Spread across major currencies |
Geographic shock absorption
When our own economy slows — a soft housing market, a fall in commodity prices, a local rate shock — an all-Australian portfolio feels all of it. Your job, your home and your investments are then all leaning on the same economy at the same time.
A global portfolio earns its income from customers in dozens of countries. Those revenues don't stop because the Australian cycle turns, and that's the quiet benefit: your wealth isn't hostage to the place you happen to live.