Investing in US stocks has long been a classic path to wealth growth, as evidenced by the S&P 500 index: over the past three years, this index covering America’s top listed companies has surged by nearly 80%. However, precisely because the index has already climbed significantly in the short term, investors might consider shifting their gaze to other parts of the world to uncover new growth opportunities while diversifying their portfolios and reducing risk.
Currently, the iShares Core MSCI EAFE ETF (IEFA) is an option worth attention. Here are the key details about this fund:
A notable feature of the iShares Core MSCI EAFE ETF is its focus on developed markets, explicitly excluding companies from the US and Canada. This is particularly attractive for investors looking to build a globalized portfolio rather than one confined to a single region.
The fund’s largest holding by country is Japan, accounting for 25%, followed by the UK (14%) and several other European nations. Due to its focus on developed countries, the fund does not include Chinese companies. This is crucial for investors concerned about tariff risks and excessive exposure to the Chinese market.
In 2025, the S&P 500 index once again delivered strong performance, rising 16%. But the iShares Core MSCI EAFE ETF did even better, with a cumulative return exceeding 27%. Although its five-year return (31%) still lags behind the S&P 500 (83%), this may signal that investors are increasingly inclined to shift funds from highly valued US stocks to international equities for asset diversification.
The ETF’s portfolio includes several high-growth industry leaders such as ASML Holding, AstraZeneca, and SAP. The financial, industrial, and healthcare sectors together account for over half of its portfolio.
Another major highlight is its highly diversified holdings: the top holding, ASML (a semiconductor lithography systems manufacturer), makes up only 2% of total assets. In contrast, many ETFs tracking the S&P 500 are overly concentrated in a few individual stocks, which could expose investors to greater risk if the market corrects. This ETF offers a more diversified investment layout.
In addition to potential fund growth, investors can also receive a substantial dividend. The ETF currently offers a dividend yield of 3.6%, more than three times that of the S&P 500 index (1.1%). Meanwhile, its annual management fee is only 0.07%. Such low costs help protect investors’ real returns.
Entering 2026, the iShares Core MSCI EAFE ETF continues to rise. As of January 19, it has gained approximately 4% year-to-date, outperforming the S&P 500’s roughly 1% gain over the same period. If investors continue reducing their US stock allocations and shifting toward companies in other global regions, this ETF still has room for further upside.
With a balanced portfolio—encompassing both growth stocks and quality dividend stocks—the iShares Core MSCI EAFE ETF may become an obvious choice for investors in 2026 and beyond.
