Allianz is closer to us than Ping An Insurance, Daimler closer than Geely.

Also in investing.

An expensive mistake, as shown by a study by Olaf Stotz, Professor of Asset Management and Pension Economics at the Frankfurt School of Finance and Management, commissioned by Nomura Asset Management Europe and available to the FAZ in advance.

He examined the investments of German institutional investors who have invested a total of 600 billion euros in shares.

Daniel Mohr

Editor in Business.

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And what do insurers and pension funds do with their customers' money?

They mainly put it on close to home.

15 percent of the share capital flowed into German companies.

On a global scale, however, German stocks only make up 2 percent.

The difference of 13 percent is called "home bias" in technical jargon, i.e. one-sided focus on the home market.

If you look at the home country a bit larger and include the euro area, then German professional investors invest 38 percent of the money entrusted to them there, but on a global scale European companies only make up a good 9 percent on the world stock exchanges - a home bias of 29 percent.

Now you could say: Why not?

You get to know the local companies better, read more about them, maybe have visited the factory or know of someone who works there.

But does that mean you can better assess the company's development?

Financial market theory says you can't.

You would also have to assess the competing companies in China, India, Mexico or Australia.

Olaf Stotz put that into numbers.

Calculating back ten years, German professional investors have generated a return of a good 9 percent.

The world stock market, measured by the MSCI World, delivered an average return of 11 percent per year.

Makes a minus of 1.8 percent because of the overweight in German and Euroland stocks.

"Free Lunch" is left behind

There is also a second price, which Stotz describes as the “free lunch” of the markets: risk diversification.

The focus on the German and European market caused the portfolio to fluctuate more, without there being a higher reward.

A wider spread would have been better.

That costs another almost 1 percent return.

The bottom line is that a return of 2.7 percentage points is lost every year due to the strong focus primarily on German, but also European stocks.

Measured against the 600 billion euros, this is 16 billion euros a year.

The calculations are based on data from the Deutsche Bundesbank.

Fund companies report their portfolio listing to her monthly.

Accordingly, German professional investors are mainly underweight in American stocks, but also in Chinese and Indian ones.

There is not enough data for private investors.

However, a look at the trading statistics of the Tradegate stock exchange regularly shows an overweight in German shares.

Does that always have to be bad?

Can't there also be a home advantage?

"The result can also be better in individual years," says Stotz.

"In the long run, however, the higher risk is not rewarded."