iShares MSCI EAFE ETF

EFA

Market cap $75.1B

Income investors holding iShares MSCI Europe Financials ETF (NASDAQ:EUFN | EUFN Price Prediction) are sitting on a fund that has done two things at once: handed them a roughly 3.5% yield and delivered a 28% one-year return.

South Korea's stock market is on a historic run, but ETF investors piling into the rally may be making a far narrower bet than they realize.

The United States is two months into its most consequential military operation since Iraq. Oil prices have surged more than 55%, and the IMF has cut its global growth forecast.

International developed-market equities have outperformed US large caps through the first four months of 2026.

The Nasdaq 100 is down more than 6% year-to-date. Meanwhile, the broad international developed market benchmark has held up far better.

For as long as most of us can remember, the conversation around international diversification went roughly the same way.

I reiterate a "Buy" rating on iShares MSCI EAFE ETF due to attractive valuation and technical support after a recent 9.3% pullback. EFA trades at a 16.7x P/E, over 4 turns cheaper than the S&P 500, with a PEG below 1.9x and a 3.31% dividend yield. The portfolio tilts toward developed ex-U.S. large caps, value, and financials, with limited Energy exposure; seasonality trends are bullish into May.

Over the last year, we have seen a significant divergence in performance between two key global equity markets, as international equities outperformed US equities. This marked a notable shift from the prior decade, during which US stock market indices consistently outperformed most global markets, particularly developed international equities represented by EAFE (Europe, Australasia, and the Far East).

US stocks entered 2026 on the back foot, with the S&P 500 down 1.4% year-to-date through early March.

Since April 2023 (about 2 weeks after Chat GPT-4 was released to much fanfare) through this most recent New Years Eve, the most straightforward decision for investors would have been to put everything into the S&P 500 and forget it. Which is to say, investing had gotten pretty boring the last few years.