MSCI EAFE
| Company type | Stock market index |
|---|---|
| Industry | Financial services |
| Founded | December 31, 1969 |
| Founder | MSCI Inc. |
Area served | Developed markets excluding United States and Canada |
| Products | Equity market index |
| Parent | MSCI Inc. |
The MSCI EAFE Index evaluates the performance of equity markets within developed nations, excluding the United States and Canada. Managed by MSCI Inc., a firm specializing in investment decision support tools, the abbreviation EAFE denotes Europe, Australasia, and Far East.
This index is weighted by market capitalization and classifies stocks based on their size: the largest 70% constitute the MSCI EAFE Large Cap; the top 85% form the MSCI EAFE Standard; and the broadest 99% are included in the MSCI Investable Market Index (IMI). The Mid Cap segment represents companies ranked between the 71st and 85th percentiles, while Small Cap covers those from the 85th to 99th percentiles.
Comprising roughly 700 firms from 21 developed countries outside North America, this index has been calculated since December 31, 1969. It stands as one of the earliest international stock indices and serves as a widely adopted benchmark for foreign equity funds based in the U.S.
Countries
The MSCI EAFE Index encompasses equities from the following nations:
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These countries align with those in the MSCI World Index, except for the exclusion of the U.S. and Canada; regions such as Africa and South America are not covered.
Greece was part of this index from May 2001 until November 2013, when it reverted to emerging market classification. Israel was added in May 2010 following its promotion to developed market status.
Investing
The MSCI EAFE serves as a common benchmark for numerous international equity fund managers based in North America. For instance, the international fund (I Fund) within the Thrift Savings Plan follows its net version.
The iShares MSCI EAFE Index fund tracks the standard index and ranks as the fourth-largest ETF worldwide. iShares also provides MSCI EAFE Small-Cap and Core MSCI EAFE funds; notably, the Core fund utilizes the IMI variant that covers nearly all investable market capitalization, including small-cap stocks not present in EFA.
Additional funds linked to or derived from the EAFE include TIAA International Equity Index Fund. Vanguard’s Developed Markets Index Inv and FTSE Developed Markets ETF previously tracked MSCI EAFE but have since transitioned to using the FTSE Developed All Cap ex US Index, which incorporates South Korea and Canada along with small-cap segments.