Page 1 of 3

Christine St Anne is Morningstar's online funds and ETFs editor.

As chief investment officer of ANZ Private, Hugh Hodges manages the bank's high net worth clientele. He also sits on ANZ's regional investment committee for Asia and New Zealand. As part of this committee, Hodges found that New Zealand clients had little home bias, if any.

"Unlike investors around the world, our New Zealand clients were not heavily exposed to their local market," Hodges says.

He made a light-hearted comment that perhaps the lack of home bias among New Zealand investors was because "they don't have an equity market to speak of".

He also noted that New Zealand investors were not heavily exposed to Australian equities. Instead, most of the allocation in their portfolios was global.

New Zealand investors seem to be unique in the world, given the majority of investors around the world adopt a home bias. With global markets facing unprecedented volatility, investors may have to rethink their portfolio.

Presenting on a panel at Terrapinn's Private Banking and Wealth Management Summit, Hodges, along with other panel members, were challenging the home bias prevalent in investment portfolios.

Other presenters included PIMCO head of wealth management Peter Dorrian, UBS head of investment strategy George Boubouras and Deutsche Private Wealth chief investment officer George Nassios.

"As Australian investors, we are very lucky to have a deep and well-regulated market. It has been running well for a long time. The tax breaks Australian investors receive is the cream on the top," Hodges says.

Dorrian spoke of the "new normal", a concept that will challenge the home bias. Coined by investment guru Bill Gross, who is PIMCO's managing director, the concept means the world now faces a "new normal" characterised by low growth due to deregulation, globalisation and deleveraging of the global financial system.

Being a bond manager, Dorrian touted the virtues of investing in bonds, noting that Australian investors have the lowest allocation to fixed income in the world.

Boubouras noted that investors in Europe had a much greater allocation to fixed income.

"Investors in those countries are not focused on growth - they want income. It is just a unique feature in that part of the market," he says.

Franking credits have made the Australian equity market a truly high-yielding market. High dividend-paying companies, such as the major banks and Telstra (TLS), are key stock staples in many investment portfolios.

Nassios says the real challenge for investors is to rethink their tactical asset allocation rather than the dominance of equities in a portfolio.