What explains the differences in international portfolio and foreign direct investment (FDI) between countries? While many existing theories focus on how trustworthy a country’s policies are, we highlight the importance of diaspora networks. We propose that diaspora networks—links between migrants living in investing countries and their home country—boost global investment by lowering transaction and information costs. This hypothesis is tested using data on investment relationships between country pairs for both portfolio and FDI. The results show that, even after accounting for various other factors, diaspora networks have a significant and substantial positive impact on cross-border investment.