Previous studies of the relative importance of industry and country factors in determining equity returns generally concluded that country factors dominate industry factors. We present evidence that industry factors have been growing in relative importance and may now dominate country factors. Furthermore, our evidence suggests that over the past five years, diversification across global industries has provided greater risk reduction than diversification by countries. These findings suggest that industry allocation is an increasingly important consideration for active managers of global equity portfolios and that investors may wish to reconsider home-biased equity allocation policies.