Exposure to Swedish companies

Hi! How should one choose a proportion of Swedish companies in a global portfolio: in relation to the whole pot (including fixed-income, gold, etc.) or in relation to the equity part only? Let’s say, I choose to increase the exposure to Swedish companies. The most popular suggestion on this forum is to set it as 10%. But compared to what?
For example, with a 80/20 split, should it be Global equities: 72%, Swedish equities: 8%, Fixed-income: 20%? Or Global equities: 70%, Swedish equities: 10%, Fixed-income and gold: 20%. Why?

The main reasons for departing from a diversified, market neutral global portfolio in order to introduce a home bias are mostly psychological and social rather than purely economically rational.

Most Swedish investors are poorly diversified and heavily tilted towards the Swedish market. If/when Swedish stocks outperform the global average, all of your friends would be exited and loudly brag about their skills and gains. Additionally, the Swedish housing market is probably more correlated to the Swedish stock market rather then the global because of this.

If you choose a market neutral portfolio, you will experience more stress during the times when the Swedish market outperformed due to fear of rising housing prices if you are looking to get into the Swedish housing market and people around you generally doing better than you. However, when the global market outperforms the Swedish market there won’t as much buzz about it among friends, on social media and in the news, so the feeling of missing out on returns when investing more closely to people around you isn’t as strong.

This asymmetry is what I have found to be the main justification, at least when investing passively. If you are looking to be more active, there is an argument to be made that a Swedish investor has a advantage on the Swedish market because of a knowledge advantage in terms of trends and company culture.

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