iShares MSCI EAFE International Index K (EFA): A Comprehensive Guide

Position：home

iShares MSCI EAFE International Index K (EFA): A Comprehensive Guide

Introduction

The iShares MSCI EAFE International Index K (EFA) is an exchange-traded fund (ETF) that tracks the performance of large- and mid-cap stocks in developed markets outside of North America. The fund invests in companies from over 20 countries, including Japan, the United Kingdom, France, Germany, and Switzerland.

Fund Overview

Fund Symbol: EFA
Issuer: BlackRock
Expense Ratio: 0.35%
Inception Date: March 25, 1994
Total Assets: $91.2 billion (as of March 31, 2023)
Number of Holdings: 916

Investment Objective and Strategy

EFA's investment objective is to provide investors with exposure to the performance of developed international equity markets. The fund tracks the MSCI EAFE Index, which is a market-capitalization-weighted index of developed market stocks outside of North America.

Risk and Return Profile

Historical Returns: Over the past 10 years, EFA has delivered an annualized return of 4.3%. The fund's returns have been volatile, with significant swings in value during both bull and bear markets.

ishares msci eafe international index k

Expected Returns: The expected return for EFA is closely tied to the performance of the MSCI EAFE Index. According to MSCI, the index is expected to deliver an annualized return of 3.5% over the next 10 years.

Risk: EFA is considered a moderately risky investment. The fund's exposure to international markets introduces additional risk factors, including currency fluctuations, geopolitical events, and economic headwinds.

Sector Allocation

EFA's sector allocation reflects the underlying composition of the MSCI EAFE Index. As of March 31, 2023, the fund's holdings were allocated as follows:

Sector	Weight
Financials	28.7%
Information Technology	19.5%
Consumer Discretionary	14.7%
Industrials	13.4%
Healthcare	11.8%
Consumer Staples	10.3%
Telecommunications	1.3%
Utilities	0.3%

Top Holdings

EFA's top holdings represent a diverse range of industries and countries. As of March 31, 2023, the fund's top 10 holdings were:

Company	Country	Weight
Toyota Motor Corporation	Japan	3.9%
Nestlé S.A.	Switzerland	3.3%
Roche Holding AG	Switzerland	3.1%
ASML Holding N.V.	Netherlands	2.9%
Samsung Electronics Co., Ltd.	South Korea	2.8%
LVMH Moët Hennessy Louis Vuitton SE	France	2.7%
Siemens AG	Germany	2.6%
Taiwan Semiconductor Manufacturing Company, Ltd.	Taiwan	2.5%
Sony Group Corporation	Japan	2.4%
Airbus SE	France	2.3%

Fund Performance

EFA has performed in line with its benchmark, the MSCI EAFE Index. Over the past 10 years, the fund has delivered an annualized return of 4.3%, compared to the index's annualized return of 4.4%.

iShares MSCI EAFE International Index K (EFA): A Comprehensive Guide

Comparative Performance

Period	EFA	MSCI EAFE Index
1 year	-11.0%	-10.8%
5 years	2.6%	2.8%
10 years	4.3%	4.4%

Advantages of Investing in EFA

Diversification: EFA provides investors with exposure to a wide range of global markets, which can help reduce overall portfolio risk.
Low Expense Ratio: EFA's expense ratio of 0.35% is competitive relative to other international equity ETFs.
Liquidity: EFA is one of the most liquid ETFs in the international equity category, making it easy to buy or sell shares at any time.
Tax Efficiency: EFA is eligible for the foreign tax credit, which can reduce the tax liability for investors.

Disadvantages of Investing in EFA

Currency Risk: EFA's investments are exposed to currency fluctuations, which can impact the fund's returns.
Volatility: EFA's historical returns have been volatile, with significant swings in value during market downturns.
Geopolitical Risk: EFA's exposure to international markets introduces geopolitical risk, which can impact the fund's performance.
Emerging Market Exposure: While EFA primarily invests in developed markets, it does have a small exposure to emerging markets, which can carry additional risk.

Comparative Table: EFA vs. VEA

Many investors compare EFA to Vanguard FTSE Developed Markets ETF (VEA) when considering international equity exposure. Here is a comparative table between the two ETFs:

Feature	EFA	VEA
Fund Symbol	EFA	VEA
Issuer	BlackRock	Vanguard
Expense Ratio	0.35%	0.03%
Number of Holdings	916	4,366
Benchmark	MSCI EAFE Index	FTSE Developed Ex-US Index
Historical Return	4.3%	4.1%
Current Yield	1.8%	2.1%

Frequently Asked Questions (FAQs)

1. What is the difference between EFA and VEA?
EFA tracks the MSCI EAFE Index, which includes large- and mid-cap stocks from developed markets outside of North America. VEA, on the other hand, tracks the FTSE Developed Ex-US Index, which includes large- and mid-cap stocks from developed markets outside of the US, including emerging markets.

2. Is EFA a good investment for long-term investors?
EFA can be a suitable investment for long-term investors with a moderate risk tolerance. The fund provides exposure to a diversified range of developed international markets, which can help reduce overall portfolio risk.

3. What is the key risk of investing in EFA?
The key risk of investing in EFA is currency risk. The fund's investments are exposed to currency fluctuations, which can impact the fund's returns.

Fund Symbol:

4. How can I invest in EFA?
EFA can be purchased through most major online brokerages. You can either buy shares of the ETF directly or invest in a fund that includes EFA as a holding.

5. What is the minimum investment amount for EFA?
The minimum investment amount for EFA depends on your brokerage firm. Some brokerages may have a minimum investment requirement, while others may allow you to invest any amount.

6. Is EFA traded on an exchange?
Yes, EFA is traded on the New York Stock Exchange (NYSE).

7. What is the dividend yield for EFA?
The dividend yield for EFA is currently 1.8%.

8. Is EFA a good choice for dividend investors?
EFA's dividend yield is below the average for the international equity category. If dividend income is a primary investment goal, there are other ETFs that may be more suitable.