Global Equity Allocation

MSCI

Remy Briand

Research

102 Pages

MSCI examines how large institutional investors approach global equity allocation, focusing on geographic diversification, home bias, and long-term portfolio construction. The paper challenges the persistence of domestic overweighting, suggesting global market cap alignment may improve outcomes while acknowledging governance and behavioral frictions.

Key Takeaways

Home Bias Declining: Institutional portfolios still show a 20–40% domestic overweight despite globalization, though this has narrowed over the past decade as cross-border investing increased.
Market Cap Benchmarking: Global market cap weights imply over 50% allocation to the US, yet many funds underweight it by 10–20%, reflecting structural and policy constraints.
Emerging Markets Growth: Emerging markets rose from roughly 5% to over 13% of global equity market cap, yet allocations often lag by 5–10%, highlighting a persistent allocation gap.
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