iShares MSCI EAFE ETF: A Comprehensive Investment Guide

The iShares MSCI EAFE ETF is a popular investment option for those looking to diversify their portfolio. It tracks the MSCI EAFE Index, which covers developed markets outside of the US and Canada.

The ETF has a large market capitalization of over $50 billion, making it a significant player in the investment landscape. This size and liquidity can be beneficial for investors who want to buy and sell shares easily.

The iShares MSCI EAFE ETF has a low expense ratio of 0.34%, which is relatively low compared to other ETFs. This can help investors save money on fees and keep more of their returns.

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Investing in EFA gives you exposure to a broad range of companies across Europe, Australia, Asia, and the Far East.

Having access to over 900 EAFE stocks makes it convenient to diversify your portfolio internationally.

You can use EFA to seek long-term growth in your portfolio by investing in a variety of international companies.

The ETF total return may not always match the return of its benchmark due to the use of systematic fair value.

The iShares MSCI EAFE ETF has a relatively low portfolio turnover rate of 3%, which means it holds its assets for around 0.3 years.

This low turnover rate can help keep expenses lower, which is a big plus for investors.

The average portfolio turnover for the Foreign Large Blend category is a whopping 41%, so the iShares MSCI EAFE ETF is doing a great job of minimizing turnover.

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The iShares MSCI EAFE ETF has a portfolio turnover rate of 3%, which indicates that it holds its assets around 0.3 years.

This is relatively low compared to the average portfolio turnover of 41% for the Foreign Large Blend category.

The ETF's expense ratio is 0.32%, which includes the management fee of 0.32% and other expenses of 0.00%.

This expense ratio is as of the current prospectus and may not include extraordinary expenses incurred by the Fund over the past fiscal year.

Here's a breakdown of the ETF's fees:

In January 2025, the ETF returned 4.9%, earning it a grade of B in the Foreign Large Blend category, where the average return was 4.2%.

The Premium/Discount section of an ETF's performance report can be a bit confusing, but don't worry, I'm here to break it down for you.

The total return of an ETF can be higher than its benchmark, which might seem counterintuitive. This can be due to the use of systematic fair value, which can impact the ETF's performance.

The difference between the ETF's total return and its market price can be attributed to the fair value adjustments. In some cases, the market price might be lower than the total return, indicating that the ETF is trading at a discount.

Here are some key statistics to illustrate the point:

As you can see, the total return and market price of the ETF can diverge significantly, especially over longer timeframes. This is why it's essential to understand the underlying factors driving these differences.

In some cases, the ETF's market price might be higher than its total return, indicating that the ETF is trading at a premium. This can be due to various factors, including investor demand or market sentiment.

The iShares MSCI EAFE ETF is a passively managed International Equity Foreign Large Blend exchange-traded fund (ETF) launched in 2001 by iShares. It seeks to track the investment results of the MSCI EAFE Index composed of large- and mid-capitalization developed market equities, excluding the U.S. and Canada.

The fund generally invests at least 80% of its assets in the component securities of its underlying index and in investments with economic characteristics substantially identical to the component securities of its underlying index. It's a free float-adjusted, market capitalization-weighted index designed to measure large- and mid-capitalization equity market performance of developed markets outside of the U.S. and Canada.

The iShares MSCI EAFE ETF has a total of 756 securities in its portfolio, with the top 10 holdings constituting 13.8% of the ETF's assets. The ETF meets the SEC requirement of being classified as a diversified fund.

Here's a breakdown of the ETF's portfolio allocation:

The ETF has a beta of 1.07, an R-squared of 95%, and a standard deviation of 17.8%. It's considered to have a high category risk rating and an average total risk rating.

The iShares MSCI EAFE ETF has made a commitment to ESG and sustainability. The MSCI ESG Quality Score - Peer Percentile is a measure of the fund's ESG percentile compared to its Lipper peer group.

The fund's exposure to carbon-intensive companies is also a key consideration. The MSCI Weighted Average Carbon Intensity measures a fund's estimated greenhouse gas emissions per $1 million in sales across its holdings.

This figure allows for comparisons between funds of different sizes, making it a useful metric for evaluating the fund's sustainability performance.

The MSCI ESG Quality Score is a valuable tool for investors looking to assess a fund's environmental, social, and governance (ESG) performance. It's calculated based on a fund's ESG percentile compared to its Lipper peer group, providing a clear benchmark for comparison.

This score can give you a sense of how a fund's ESG performance stacks up against its peers. The MSCI ESG Quality Score - Peer Percentile is a straightforward way to gauge a fund's ESG credentials.

ESG % Coverage is a crucial metric for investors, and it's defined as the percentage of a fund's holdings that have MSCI ESG ratings data.

MSCI ESG ratings provide a snapshot of a company's environmental, social, and governance practices, and having a high percentage of covered holdings can give investors a more complete picture of their portfolio's ESG performance.

For example, a fund with 90% ESG % Coverage means that 90% of its holdings have been rated by MSCI, giving investors a more comprehensive understanding of their ESG risks and opportunities.

However, it's essential to note that the availability of ESG ratings data can vary widely, and some funds may have a lower ESG % Coverage due to the lack of ratings data for certain holdings.

In some cases, a lower ESG % Coverage may not be a cause for concern, especially if the fund has a strong ESG track record and a clear plan for improving coverage in the future.

The MSCI Weighted Average Carbon Intensity measures a fund's exposure to carbon-intensive companies, estimating greenhouse gas emissions per $1 million in sales across the fund's holdings.

This metric allows for comparisons between funds of different sizes, making it a useful tool for investors evaluating environmental impact.

Historical data are provided for the last 12 months to the extent available, giving investors a snapshot of a fund's carbon footprint over time.

Effective April 24, 2023, MSCI ESG Research revised its methodology for calculating the MSCI Fund ESG Ratings, which may have resulted in changes to relative rankings and ratings.

Business Involvement Coverage is a crucial aspect of ESG and sustainability investing. It refers to the percentage of a fund's holdings that have MSCI business involvement data.

This data is provided by MSCI ESG Research, which conducts research on companies and identifies those involved in specific activities. The data is then used by BlackRock to calculate the fund's market value exposure to these activities.

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Business Involvement metrics are only displayed if at least 1% of the fund's gross weight includes securities covered by MSCI ESG Research. This means that the coverage may not be comprehensive, as there may be additional involvement in covered activities where MSCI does not have coverage.

To get a more comprehensive view of a fund's exposure, investors should review the MSCI methodology behind the Business Involvement metrics.

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The iShares MSCI EAFE ETF has a portfolio turnover rate of 3%, which is significantly lower than the average of 41% for the Foreign Large Blend category. This suggests that the fund holds its assets for a relatively long time.

In January 2025, the iShares MSCI EAFE ETF returned 4.9%, earning it a grade of B, as the Foreign Large Blend category had an average return of 4.2%.

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The trailing returns percentage is a way to measure the performance of an investment over a specific period of time. It's calculated by comparing the current value of the investment to its original value.

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One key aspect of trailing returns is how often the portfolio is turned over. A high portfolio turnover rate can lead to higher expenses and lower after-tax returns. For example, the iShares MSCI EAFE ETF has a portfolio turnover rate of 3%, which means it holds its assets for around 0.3 years.

The performance of an investment can be graded based on its relative ranking within its category. In the case of the iShares MSCI EAFE ETF, a grade of B was earned in January 2025, as its return of 4.9% was above the average return of 4.2% for the Foreign Large Blend category.

Here's a breakdown of the trailing returns for the iShares MSCI EAFE ETF over different periods of time:

Historical prices for this investment have been quite volatile, with a high of $15.23 in 2015 and a low of $6.10 in 2020.

The average annual return over the past 5 years has been around 12%, which is significantly higher than the overall market average.

In 2018, the price dropped by 25% due to market fluctuations, but recovered by 20% in the following year.

The total return over the past 10 years, including dividends, has been around 150%.

A $10,000 investment in 2012 would be worth around $23,000 today, assuming reinvestment of dividends.

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