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EAFE Index

What is the 'EAFE Index'

The EAFE Index is an index created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indexes from Europe, Australia and Southeast Asia. This international index has been in existence for more than 30 years.

Explaining 'EAFE Index'

As of February 2007, equities from the Japanese stock markets made up around 25% of the index, of which Japan is the largest index component.

Many investors use the S&P 500 as a benchmark to assess the performance of an investment portfolio. This is an appropriate benchmark for American stocks. The EAFE index is often used as a benchmark for the performance of an investor's international equity investments.


Further Reading


Finite-time singularity in the dynamics of the world population, economic and financial indices
www.sciencedirect.com [PDF]
… from 0 to 1998, estimated by J. Bradford DeLong at the Department of Economics, UC Berkeley … Global Financial Data's indices from 1919 through 1969 and Morgan Stanley Capital International's indices from 1970 … The EAFE Index includes Europe, Australia and the Far East …

Global financial markets and the risk premium on US equityGlobal financial markets and the risk premium on US equity
www.sciencedirect.com [PDF]
… from 0 to 1998, estimated by J. Bradford DeLong at the Department of Economics, UC Berkeley … Global Financial Data's indices from 1919 through 1969 and Morgan Stanley Capital International's indices from 1970 … The EAFE Index includes Europe, Australia and the Far East …

Study of memory effects in international market indicesStudy of memory effects in international market indices
www.sciencedirect.com [PDF]
… from 0 to 1998, estimated by J. Bradford DeLong at the Department of Economics, UC Berkeley … Global Financial Data's indices from 1919 through 1969 and Morgan Stanley Capital International's indices from 1970 … The EAFE Index includes Europe, Australia and the Far East …

Do precious metals shine? An investment perspectiveDo precious metals shine? An investment perspective
www.tandfonline.com [PDF]
… from 0 to 1998, estimated by J. Bradford DeLong at the Department of Economics, UC Berkeley … Global Financial Data's indices from 1919 through 1969 and Morgan Stanley Capital International's indices from 1970 … The EAFE Index includes Europe, Australia and the Far East …

Active versus Passive Strategies for EAFE and the S&P 500Active versus Passive Strategies for EAFE and the S&P 500
jpm.pm-research.com [PDF]
… from 0 to 1998, estimated by J. Bradford DeLong at the Department of Economics, UC Berkeley … Global Financial Data's indices from 1919 through 1969 and Morgan Stanley Capital International's indices from 1970 … The EAFE Index includes Europe, Australia and the Far East …

ADR characteristics and performance in international and global indexesADR characteristics and performance in international and global indexes
link.springer.com [PDF]
… from 0 to 1998, estimated by J. Bradford DeLong at the Department of Economics, UC Berkeley … Global Financial Data's indices from 1919 through 1969 and Morgan Stanley Capital International's indices from 1970 … The EAFE Index includes Europe, Australia and the Far East …

Analysis of the geographical diversification of financial instrumentsAnalysis of the geographical diversification of financial instruments
www.ceeol.com [PDF]
… from 0 to 1998, estimated by J. Bradford DeLong at the Department of Economics, UC Berkeley … Global Financial Data's indices from 1919 through 1969 and Morgan Stanley Capital International's indices from 1970 … The EAFE Index includes Europe, Australia and the Far East …

Global economic activity as an explicator of emerging market equity returnsGlobal economic activity as an explicator of emerging market equity returns
www.sciencedirect.com [PDF]
… from 0 to 1998, estimated by J. Bradford DeLong at the Department of Economics, UC Berkeley … Global Financial Data's indices from 1919 through 1969 and Morgan Stanley Capital International's indices from 1970 … The EAFE Index includes Europe, Australia and the Far East …

The performance of value and growth portfolios in East Asia before the Asian financial crisisThe performance of value and growth portfolios in East Asia before the Asian financial crisis
www.sciencedirect.com [PDF]
… from 0 to 1998, estimated by J. Bradford DeLong at the Department of Economics, UC Berkeley … Global Financial Data's indices from 1919 through 1969 and Morgan Stanley Capital International's indices from 1970 … The EAFE Index includes Europe, Australia and the Far East …



Q&A About EAFE Index


Who created this index?

Morgan Stanley Capital International (MSCI) created this index.

What does the acronym "EAFE" stand for?

Europe, Australia and Southeast Asia.

What is EAFE Index?

EAFE index is an international benchmark for the performance of major international equity markets.

What does the iShares MSCI EAFE ETF track?

The iShares MSCI EAFE ETF tracks stocks in developed markets outside of North America.

Why would someone invest into an index instead of directly investing into countries' economies?

An investor may choose to invest into indexes because it allows them to diversify their portfolio without having to worry about individual company risk or political risk associated with specific countries.

How many countries does this index include?

This index includes 23 different countries from Europe, Australasia, and Asia excluding Japan and Canada. These 23 different countries include Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong (China), Ireland , Israel , Italy , Japan , Netherlands , New Zealand , Norway , Portugal , Singapore (Singapore) Sweden Switzerland (Switzerland) United Kingdom .

Is there a difference between investing in a country and investing in an index?

Yes, there is a difference. Investing in a country means you are directly invested into companies within that country's economy while investing into an index means you are indirectly invested into companies within multiple countries' economies.

How many indexes make up the EAFE Index?

There are 21 major MSCI indexes from Europe, Australia and Southeast Asia that make up the EAFE Index. Japan is the largest component of this index at 25 percent.

Why do investors use S&P 500 as a benchmark to assess portfolio performance?

Investors use S&P 500 as a benchmark to assess portfolio performance because it represents American stocks well. The EAFE Index is often used as a benchmark for the performance of an investor's international equity investments .

Where can you purchase an investment product that tracks the performance of the iShares MSCI EAFE ETF?

You can purchase an investment product that tracks the performance of the iShares MSCi EAFE ETF on any stock exchange.

What is the iShares MSCI EAFE ETF?

The iShares MSCI EAFE ETF is a fund that tracks the performance of stocks in developed markets outside of North America.

How long has this index been in existence?

This index has been in existence for more than three years.