This research will focus on legal barriers to overseas investment imposed on mutual funds across Asian countries, and particularly in Southeast Asia. Mutual funds in the region face restrictions regarding the fraction of their holdings that can be invested in foreign securities. Some of these restrictions can be relatively strict—Indonesian mutual funds are not allowed to hold more than 15% of their holdings in foreign securities. These restrictions limit the ability of local investors to invest in foreign assets, which in turn will limit the investors’ ability to diversify their portfolios and retirement accounts. As these investors are already exposed to the domestic risk through their labour income (as well as government policies), this restriction can prove harmful, particularly for the middle class. The research will examine the costs and benefits of geographical investment restrictions on mutual funds’ investment. We aim to collect data on legal barriers to geographical diversification, and then examine research questions related to (1) the effects of these legal barriers on the performance of local mutual funds, (2) the corresponding effects on the ability of local investors to reduce their risk exposure and attain more optimal portfolios, and (3) the effects on the development of local and regional financial markets.