Abstract: Clarifying the factors affecting the choice of foreign portfolio investment will not only help investors to better invest in foreign securities， but also help a country to effectively attract foreign capital.Based on the theoretical explanation of the psychic distance affecting the choice of foreign portfolio investment，the improved gravity model of foreign portfolio investment and the application of cross-country data， the paper empirically examines the influence of psychic distance and its dimensions on the two types of foreign portfolio investment， namely， foreign equity investment and foreign bond investment. The empirical results show that psychic distance or psychic distance components have a significant negative impact on the two types of foreign portfolio investment. And the degree of negative impact on foreign bond investment is stronger than the negative impact on foreign equity investment. At the same time， the quality of accounting， the efficiency of financial services and the degree of investor protection have a significant positive impact on the two types of foreign portfolio investment.

Key words: foreign portfolio investment, psychic distance, home bias, cognition and decision preference, gravity model