19 important points you should know about iShares EFA before you buy it

Jennalyn Sobrevilla: Nov 15, '18

Are you looking to invest in iShares EFA and would like to get some very important data points about this ETF (including alternatives to investing in EFA)?  If so, you came to the right place.   

In this iShares MSCI EAFE ETF review, we’ll address key questions our readers have been asking us about this ETF, beyond what you can normally find on Yahoo Finance and ETF.com.

 iShares MSCI EAFE ETF is a top U.S. - Large Cap Growth fund by assets and is very popular among individual and professional investors.  We’ll cover some of the basic and advanced points you should know about EFA, such as:

  1. EFA ETF profile (i.e., what does it track?)
  2. EFA underlying index
  3. EFA number of holdings
  4. EFA historical performance
  5. EFA dividend yield
  6. EFA expense ratio
  7. Implications on investing in EFA on taxable accounts
  8. EFA beta (risk level)
  9. EFA Sharpe ratio                                                                                             
  10. EFA vs SPY
  11. EFA vs EEM
  12. EFA vs VWO
  13. EFA vs IEFA
  14. EFA vs QQQ
  15. EFA vs VEU
  16. EFA vs IVV
  17. EFA vs VEA
  18. EFA vs CFA
  19. EFA vs VOO

So let’s start.  Scroll down to questions that are most interesting to you.

1. What is iShares MSCI EFA?

iShares MSCI EFA ETF is a market-cap-weighted index fund of developed-market securities based in Europe, Australia, and the Far East (EAFE). 

2. What is the underlying index for EFA?

MSCI EAFE Index.  The EAFE Index has been developed by MSCI as an equity benchmark for international stock performance.

3. How many holdings does EFA have? What are the top holdings?

EFA has 932 holdings.

The top 10 holdings represent 11.11% of total EFA assets.  Here are the top holdings:

NameSymbol% Assets
Nestle SANSRGF1.78
HSBC Holdings PLCHBCYF.L1.33
Novartis AGNVSEF1.24
Roche Holding AGRHHVF1.1
Toyota Motor CorpTOYOF1.09
British American Tobacco PLCBTAFF.L1.01
Royal Dutch Shell PLC Class ARYDAF.L0.95
BP PLCBPAQF.L0.9
Total SATTFNF.PA0.89
Royal Dutch Shell PLC BRYDBF.L0.82

4. How did EFA perform historically?

EFA has generated the following returns:

  • 1-months return is -1.57%;
  • 3-months return is -1.96%;
  • 1-years return is 5.89%;
  • 3-years return is 4.75%;
  • 5-years return is 6.21%;
  • YTD return is -2.84%.

5. What is EFA dividend yield and payout?

EFA dividend yield is 3.95%.  A dividend yield is a ratio between an ETF’s annual dividend payout and its current price. 

EFA annualized payout is $2.71.  An annualized payout is a standard in finance that lets investors compare securities that have different payout frequencies.

6. What is EFA expense ratio?

EFA expense ratio is 0.32%. The expense ratio of a fund is the total percentage of fund assets used for administrative, management, and all other expenses.7. What is EFA tax efficiency (tax-cost ratio)?

EFA tax-cost ratio is 0.63%. The tax-cost ratio measures how much a fund’s annualized return is diminished by taxes investors pay on distributions. Funds like EFA regularly distribute dividends and capital gains.

8. What is EFA beta? How would you assess EFA risk?

EFA 3-year beta is 0.97.  Beta is a measure of volatility, or systematic risk, of a fund in comparison to the market as a whole. S&P 500 Beta is equal to 1. A Beta higher than 1 means riskier than the market overall; conversely, lower than 1 means less risky than the market.

9. What is EFA Sharpe ratio?

The 3-year Sharpe ratio for EFA is 0.75. The Sharpe ratio is the average return earned in excess of the risk-free rate per unit of volatility or total risk. Generally, the greater the value of the Sharpe ratio, the more attractive the risk-adjusted return is.10. Compare and contrast: EFA vs SPY.

EFA is a developed market ex-U.S. fund, while SPY is a US large-cap ETF.  

EFA has a higher expense ratio than SPY: 0.32% vs. 0.09%.  

Over the last 10 years, SPY returned more than EFA (10.06% vs. 2.78%).  

Below is a comprehensive comparison between EFA and SPY.


EFASPY
SegmentEquity: Developed Markets Ex-U.S. - Total MarketEquity: U.S. - Large Cap
Net Assets$80.29B$278.47B
Expense Ratio0.32%0.09%
Management Stylepassive (index-based)passive (index-based)
Underlying IndexMSCI EAFE IndexS&P 500
YTD Return-2.84%2.52%
1-Year Return5.89%14.28%
3-Year Return4.75%11.86%
5-Year Return6.21%13.30%
10-Year Return2.78%10.06%
1-Year Tax Cost Ratio1.07%0.78%

SPY  is an ETF that, before expenses, generally tracks the performance of S&P 500 component common stocks.

11. Compare and contrast: EFA vs EEM.

EFA is a developed market ex-U.S. fund, while EEM is an emerging market ETF.  Both ETFs have roughly 900 holdings.  

EEM has a higher expense ratio than EFA: 0.69% vs. 0.32%.  

Over the last 10 years, EFA returned more than EEM (2.78% vs. 1.53%).  

Below is a comparison table for EFA and EEM.


EEMEFA
SegmentEquity: Emerging Markets - Total MarketEquity: Developed Markets Ex-U.S. - Total Market
Net Assets$43.82B$80.29B
Expense Ratio0.69%0.32%
Management Stylepassive (index-based)passive (index-based)
Underlying IndexMSCI Emerging Markets IndexMSCI EAFE Index
YTD Return-7.44%-2.84%
1-Year Return6.98%5.89%
3-Year Return5.14%4.75%
5-Year Return4.44%6.21%
10-Year Return1.53%2.78%
1-Year Tax Cost Ratio0.72%1.07%

EEM seeks investment results that correspond to, before expenses and fees, to the MSCI Emerging Markets Free Index.  MSCI Emerging Markets Free Index is designed to measure equity market performance in the global emerging markets.

12. Compare and contrast: EFA vs VWO.

EFA is a developed market ex-U.S. ETF, while VWO is an emerging market ETF.  VWO has over 3,700 holdings, while EFA has 900.  

EFA has a higher expense ratio than VWO: 0.32% vs. 0.14%.  

Over the last 10 years, EFA returned more than VWO (2.78% vs. 1.68%).  

Below is a comparison table for EFA and VWO.


EFAVWO
SegmentEquity: Developed Markets Ex-U.S. - Total MarketEquity: Emerging Markets - Total Market
Net Assets$80.29B$70.75B
Expense Ratio0.32%0.14%
Management Stylepassive (index-based)passive (index-based)
Underlying IndexMSCI EAFE IndexFTSE Emerging Markets All Cap China A Index
YTD Return-2.84%-7.32%
1-Year Return5.89%5.94%
3-Year Return4.75%3.68%
5-Year Return6.21%4.34%
10-Year Return2.78%1.68%
1-Year Tax Cost Ratio1.07%0.81%

VWO seeks to track the performance of the FTSE Emerging Markets All Cap China A Inclusion Index, that measures the return of stocks issued by companies located in emerging market countries.

13. Compare and contrast: EFA vs IEFA.

Both EFA and IEFA are developed market ex-U.S. fund.  IEFA is more diversified though, and it contains over 2,400 holdings (vs. 900 for EFA).  

EFA has a higher expense ratio than IEFA: 0.32% vs. 0.08%.  

Over the last 5 years, IEFA returned more than EFA (7.14% vs. 6.21%).  

Below is a detailed comparison between EFA and IEFA.


EFAIEFA
SegmentEquity: Developed Markets Ex-U.S.Equity: Developed Markets Ex-U.S. Total Market
Net Assets$80.29B$52.42B
Expense Ratio0.32%0.08%
Management Stylepassive (index-based)passive (index-based)
Underlying IndexMSCI EAFE IndexMSCI EAFE Investable Market Index
YTD Return-2.84%-2.39%
1-Year Return5.89%7.13%
3-Year Return4.75%5.68%
5-Year Return6.21%7.14%
1-Year Tax Cost Ratio1.07%0.78%

IEFA seeks investment results that correspond to the price and yield performance of the MSCI EAFE Investable Market Index, which is designed to measure large-, mid-, and small-cap capitalization equity market performance and includes stocks from Europe, Australasia, and the Far East.

14. Compare and contrast: EFA vs QQQ.

EFA is a developed market ex-U.S. fund, while QQQ is a US large-cap tech ETF.  QQQ has ~100 holdings, of which are tech stocks. 

EFA has a higher expense ratio than QQQ: 0.32% vs. 0.20%.  

Over the last 10 years, QQQ returned more than EFA (15.39% vs. 2.78%).  

Below is a detailed comparison between EFA and QQQ.


EFAQQQ
SegmentEquity: Developed Markets Ex-U.S. - Total MarketEquity: U.S. - Large Cap
Net Assets$80.29B$63.24B
Expense Ratio0.32%0.20%
Management Stylepassive (index-based)passive (index-based)
Underlying IndexMSCI EAFE IndexNASDAQ-100 Index
YTD Return-2.84%10.61%
1-Year Return5.89%25.70%
3-Year Return4.75%18.19%
5-Year Return6.21%20.55%
10-Year Return2.78%15.39%
1-Year Tax Cost Ratio1.07%0.25%

QQQ seeks to provide investment results that generally correspond to the price and yield performance of the component securities of the Nasdaq-100 Index.

15. Compare and contrast: EFA vs VEU.

EFA is a developed market ex-U.S. fund, while VEU is Global ex-U.S. ETF focused on both emerging and developed markets.  VEU has over 2,500 holdings, while EFA has only 900.   

EFA has a higher expense ratio than VEU: 0.32% vs. 0.11%.  

Over the last 10 years, VEU returned marginally more than EFA (2.79% vs. 2.78%).  

Below is a comparison table for EFA and VEU.


EFAVEU
SegmentEquity: Developed Markets Ex-U.S. - Total MarketEquity: Global Ex-U.S. - Total Market
Net Assets$80.29B$23.87B
Expense Ratio0.32%0.11%
Management Stylepassive (index-based)passive (index-based)
Underlying IndexMSCI EAFE IndexFTSE All-World ex-US Net Index
YTD Return-2.84%-3.88%
1-Year Return5.89%6.63%
3-Year Return4.75%5.19%
5-Year Return6.21%6.28%
10-Year Return2.78%2.79%
1-Year Tax Cost Ratio1.07%0.80%

VEU tracks the performance of a benchmark index that measures the investment return of stocks of companies located in developed and emerging markets around the world. The Fund employs a "passive management" designed to track the performance of the FTSE All-World ex USA Index.

16. Compare and contrast: EFA vs IVV.

EFA is a developed market ex-U.S. fund, while IVV is a US large-cap ETF, tracking S&P 500 stocks. 

EFA has a higher expense ratio than IVV: 0.32% vs. 0.04%.  Over the last 10 years, IVV returned more than EFA (10.13% vs. 2.78%).  

Below is a detailed comparison between EFA and IVV.


EFAIVV
SegmentEquity: Developed Markets Ex-U.S. - Total MarketEquity: U.S. - Large Cap
Net Assets$80.29B$156.26B
Expense Ratio0.32%0.04%
Management Stylepassive (index-based)passive (index-based)
Underlying IndexMSCI EAFE IndexS&P 500
YTD Return-2.84%2.51%
1-Year Return5.89%14.34%
3-Year Return4.75%11.90%
5-Year Return6.21%13.42%
10-Year Return2.78%10.13%
1-Year Tax Cost Ratio1.07%0.61%

IVV seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the S&P 500 Index. The S&P 500 Index includes approximately 77% of the market capitalization of all publicly traded U.S. equity securities.

17. Compare and contrast: EFA vs VEA.

Both EFA and VEA are developed market ex-U.S. fund.   VEA's coverage is much broader though--it includes over 3,800 stocks and in some ways, it is more comparable to IEFA.  

EFA has a higher expense ratio than VEA: 0.32% vs. 0.07%.  

Over the last 10 years, VEA returned more than EFA (3.21% vs. 2.78%).  

Below is a comparison table for EFA and VEA.


EFAVEA
SegmentEquity: Developed Markets Ex-U.S. - Total MarketEquity: Developed Markets Ex-U.S. - Total Market
Net Assets$80.29B$71.17B
Expense Ratio0.32%0.07%
Management Stylepassive (index-based)passive (index-based)
Underlying IndexMSCI EAFE IndexFTSE Developed All Cap ex US Index Net TR US RIC
YTD Return-2.84%-2.82%
1-Year Return5.89%6.97%
3-Year Return4.75%5.68%
5-Year Return6.21%6.90%
10-Year Return2.78%3.21%
1-Year Tax Cost Ratio1.07%0.83%

VEA tracks the performance of a benchmark index that measures the investment return of stocks issued by companies located in the major markets of Europe and the Pacific Region. The Fund employs an indexing investment approach, mirroring the FTSE Developed All Cap ex-U.S. Index.

18. Compare and contrast: EFA vs CFA.

EFA is a developed market ex-U.S. fund, while CFA is a U.S. large-cap ETF, focused top 500 stocks, however screening for quality of earnings and low volatility. 

CFA has a higher expense ratio than EFA: 0.35% vs. 0.32%.  

Over the last 10 years, EFA returned more than CFA (2.78% vs. 0.00%).  

Below is an in-depth comparison between EFA and CFA.


CFAEFA
SegmentEquity: U.S. - Large CapEquity: Developed Markets Ex-U.S. - Total Market
Net Assets$474.45M$80.29B
Expense Ratio0.35%0.32%
Management Stylepassive (index-based)passive (index-based)
Underlying IndexCEMP U.S. Large Cap 500 Volatility Weighted IndexMSCI EAFE Index
YTD Return1.86%-2.84%
1-Year Return13.30%5.89%
3-Year Return11.83%4.75%
5-Year ReturnN/A6.21%
10-Year ReturnN/A2.78%
1-Year Tax Cost Ratio0.53%1.07%

CFA (VictoryShares US 500 Volatility Weighted Index Fund) tracks an index of the largest US stocks by market cap, screened for positive earnings and weighted by volatility.  

19. Compare and contrast: EFA vs VOO.

EFA is a developed market ex-U.S. fund, while VOO is a U.S. large-cap ETF.  EFA has 900 holdings, while VOO has 500. 

EFA has a higher expense ratio than VOO: 0.32% vs. 0.04%.  

Over the last 5 years, VOO returned more than EFA (13.45% vs. 6.21%).  

Below is a detailed comparison between EFA and VOO.


EFAVOO
SegmentEquity: Developed Markets Ex-U.S. - Total MarketEquity: U.S. - Large Cap
Net Assets$80.29B$90.22B
Expense Ratio0.32%0.04%
Management Stylepassive (index-based)passive (index-based)
Underlying IndexMSCI EAFE IndexS&P 500
YTD Return-2.84%2.65%
1-Year Return5.89%14.52%
3-Year Return4.75%11.96%
5-Year Return6.21%13.45%
1-Year Tax Cost Ratio1.07%0.45%

VOO seeks to track the performance of its benchmark index, S&P 500. The Fund employs an indexing investment approach. It attempts to replicate the target index by investing all of its assets in the stocks that make up the Index with the same approximate weightings as the Index.

You can also use Finstead's ETF and mutual fund comparison tool to find out more about the alternatives to investing in EFA.  Type any two funds you'd like to compare, such as EFA vs. SPY, or EFA vs. VWO to get the insight.  

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