On average Australians invest 80% of their money locally and 20% with
overseas companies. This home bias has brought higher returns than
investing in international shares over 20 years. Yet there's a price –
it costs 1.74% more to attract capital for Australian business because
it's seen as small and risky. This premium is a drag on economic
development that can be overcome through more widespread investment in
foreign markets, argues Bohui Zhang, a researcher in international
corporate finance at the Australian School of Business. While applying
standard investment "diversification" rules to sinking money into
offshore markets definitely increases opportunities, other experts warn
it also means sharing the risks.