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EAFE Index: Definition, Countries Included, and Use As an Index

A summary explanation of MSCI’s methodology and assumptions for its ITR metric can be found here. None of these companies make any representation regarding the advisability of investing in the Funds. With the exception of BlackRock Index Services, LLC, who is an affiliate, BlackRock Investments, LLC is not affiliated with the companies listed above.

Diversification and asset allocation may not protect against market risk or loss of principal. For Russian equity securities, as well as American Depositary Receipts and Global Depositary Receipts evidencing ownership of Russian equity securities and for which trading has been suspended, the calculated values are based on the Fund’s valuation price. The MSCI EAFE index is widely used in the investment management community as the standard for judging the performance of foreign mutual funds and pension accounts. Managers of these funds compare their own performance to the MSCI EAFE to determine whether they are providing value to clients or not. The Index is widely used as a benchmark and as the basis for index-linked financial products.

IShares MSCI EAFE International Index is a market-cap-weighted portfolio of large- and mid-cap stocks in the developed international market. Its low fee and category-representative portfolio make it a compelling option. In addition, changes in the market value of larger-cap securities will result in a bigger move in the index than changes in the market value of smaller-cap stocks. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown.

Multiple exchange traded funds are based on the MSCI EAFE Index and the ICE Futures Europe, ICE Futures US and Chicago Board Options Exchange (CBOE) are licensed to list futures contracts on this Index. Many managers of North American international stock funds use the EAFE as a performance benchmark. For example, Thrift Savings Plan’s international fund (I Fund) tracks the net version of this index. The EAFE Index is an international stock index that was launched in 1986 by Morgan Stanley Capital International.

  1. Investors can also find information regarding valuation metrics and other fundamentals, as well as risk characteristics that may be important to consider when building a portfolio.
  2. Its individual components are weighted according to their market capitalization.
  3. We provide timely and consistent treatment of corporate events and synchronized rebalancings, globally.
  4. Some BlackRock funds make distributions of ordinary income and capital gains at calendar year end.
  5. MSCI puts strong emphasis on investability and replicability of its indexes through the use of size and liquidity screens.
  6. International investing involves risks, including risks related to foreign currency, limited liquidity, less government regulation and the possibility of substantial volatility due to adverse political, economic or other developments.

They are Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, and the UK. An example of an ETF that tracks the performance of the EAFE Index is the iShares MSCI EAFE ETF (EFA). EFA has net assets of $49 billion and a 0.33% expense ratio, as of February 2023. Other ETFs that mirror the performance of the EAFE Index are iShares Core MSCI EAFE (IEFA) and the iShares MSCI EAFE Small-Cap (SCZ) ETFs. Share this fund with your financial planner to find out how it can fit in your portfolio.

The Past Two Decades Have Squeezed Stocks

MSCI EAFE covers about 85% of the free float-adjusted market capitalization in each country that it targets. An equity index which captures large, mid and small-cap representation across Developed Markets countries around the world, excluding the U.S. and Canada. Using MSCI EAFE as a framework to build portfolios helps to avoid unintended bets and risks.

In other words, larger companies receive a higher percentage of fund investment. Covers the full opportunity set and all its segments, including GICS® sectors. All of MSCI’s indexes are created using the Global Industry Classification Standard (GICS®), an industry classification system developed by MSCI and S&P Global, which provides a common framework to classify stocks. They offer exhaustive coverage of the investable opportunity set with non-overlapping size and style segmentation.

No, your 401(k) isn’t doomed. Yes, you can use this crazy market to help turn it around

Business Involvement metrics are designed only to identify companies where MSCI has conducted research and identified as having involvement in the covered activity. As a result, it is possible there is additional involvement in these covered activities where MSCI does not have coverage. This information should not be used to produce comprehensive lists of companies without involvement. Business Involvement metrics are only displayed if at least 1% of the fund’s gross weight includes securities covered by MSCI ESG Research. The ITR metric estimates a fund’s alignment with the Paris Agreement temperature goal. The ITR metric is not a real time estimate and may change over time, therefore it is prone to variance and may not always reflect a current estimate.

INVESTMENT OBJECTIVE

Some BlackRock funds make distributions of ordinary income and capital gains at calendar year end. There is no assurance that a fund will repeat that yield in the future. The Information has not been submitted to, nor received approval from, the US SEC or any other https://1investing.in/ regulatory body. Some funds may be based on or linked to MSCI indexes, and MSCI may be compensated based on the fund’s assets under management or other measures. MSCI has established an information barrier between equity index research and certain Information.

Amounts are rounded to the nearest basis point, which in some cases may be “0.00”. Robust foundation allows investors to measure exposure to all sources of equity returns using a single global framework. Israel joined this index in May 2010 when MSCI upgraded Israel from emerging market to developed market. Greece was part of this index from May 2001, when MSCI upgraded Greece from emerging market to developed market, to November 2013 when MSCI downgraded Greece from developed to emerging market. The pros and cons of the EAFE Index discussed below relate to exchange-traded funds (ETFs) and mutual funds that are designed to track its performance.

MSCI stands for Morgan Stanley Capital International, which is a financial institution that provides equity, fixed income, and hedge fund stock market indexes and portfolio analysis tools. EAFE stands for Europe, “Australasia” (Australia & New Zealand), and the Far East (East Asia). Because the ITR metric is calculated in part by considering the potential for a company within the fund’s portfolio to reduce its emissions over time, it is forward-looking and prone to limitations. As a result, BlackRock publishes MSCI’s ITR metric for its funds in temperature range bands.

There are many different exchange-traded funds (ETFs) focused on the MSCI EAFE index. Markets may want to consider these funds to add international diversification to their portfolios. The holdings in MSCI EAFE are weighted according to market capitalization.

International investing involves special risks including, but not limited to currency fluctuations, illiquidity and volatility. The fund may use derivatives to hedge its investments or to seek to enhance returns. Derivatives entail risks relating to liquidity, leverage and credit that may reduce returns and increase volatility. An index fund has operating and other expenses while an index does not. As a result, while an Index fund will attempt to track the applicable index as closely as possible, it will tend to underperform the index to some degree over time..

IShares unlocks opportunity across markets to meet the evolving needs of investors. With more than twenty years of experience, iShares continues to drive progress for the financial industry. IShares funds are powered by the expert portfolio and risk management of BlackRock.

Performance results reflect past performance and are no guarantee of future results. Investment return and principal value of shares will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Performance information shown without sales charge would have been lower if the applicable sales charge had been included. Performance msci eafe international during periods of exceptional market conditions should not be expected to be repeated in a normal market environment. Current performance may be lower or higher than the performance data quoted.Performance shown for certain share classes of certain funds is synthetic, pre-inception performance leveraging the performance of a different share class of the fund.

Morningstar’s Analysis MAIIX

Where data is not available, and / or if data changes, the estimation methods vary, particularly those related to a company’s future emissions. Our indexes are built using an innovative maintenance methodology that provides superior balance between the need for a stable index that is flexible enough to adjust quickly to a constantly changing opportunity set. We provide timely and consistent treatment of corporate events and synchronized rebalancings, globally. The MSCI EAFE Index is designed to represent the performance of large and mid-cap securities across 21 developed markets, including countries in Europe, Australasia and the Far East, excluding the U.S. and Canada. The Index is available for a number of regions, market segments/sizes and covers approximately 85% of the free float-adjusted market capitalization in each of the 21 countries.

The EAFE Index was created to track the performance of mid- and large-cap stocks across 21 developed market countries in Europe, Australasia, and the Far East (EAFE). The index was launched by Morgan Stanley Capital International (MSCI) in 1986 and covers 795 stocks from 21 countries. Index performance returns do not reflect any management fees, transaction costs or expenses. Investors should carefully consider the expense ratios, liquidity, and other characteristics of these funds before investing in them. There are leveraged and inverse ETFs that track the MSCI EAFE, but these are advanced investment products that investors should approach with caution.

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