Cullen Roche at Pragmatic Capitalism has argued that to be truly passive that an investor would have to follow the market weights of the world markets. For example, the U.S. has 53% or so of the world stock market capitalization. Vanguard for its Target Date and LifeStrategy Funds uses a 60% allocation. Someone made a judgment to overweight US Stocks a bit relative to the world market. It wasn't too long ago that Vanguard had a 70% allocation to U.S. Stocks. Why is 60% U.S. better than 70%?
My guess is that Vanguard has come over more and more to Roche's thinking. I also noticed that Vanguard added Total International Bond to their Target Date and LifeStrategy portfolios, now International is 30% of Vanguard's bond allocation. I think Vanguard is coming around to a more "world portfolio" point of view.
You can't help but notice that International right now is cheaper than the U.S. Compare the valuation benchmarks of the US Total Stock Market Index vs. Developed Market Indexes vs. Emerging Markets Indexes, you will see what I mean. Emerging Markets are particularly compelling. I think that Vanguard has noticed this as well.
In another thread, Packer16 mentions that stock markets do better in countries where there is a strong sense of free markets and limited government interference. He said this applies to the U.K. and other Anglosphere countries like the U.S., Canada, Australia, and South Africa. He also mentioned Scandinavian countries and the Netherlands. If you didn't want returns dampened by investing in countries that don't have free markets, a US only investment strategy makes sense.
The 20th Century was also the American Century, I suppose a lot depends on whether or not you believe the 21st Century will also be an American one too.
If you are a believer in U.S. only investing, I guess it is home country preference. If you believe that it makes sense to invest internationally, it is home country bias.
A fool and his money are good for business.