iShares MSCI EAFE ETF

EFA

Market cap $76.5B

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.

Roxanna Islam, head of sector and industry research at VettaFi, joined Nate Geraci on this week's ETF Prime to discuss record international equity flows. The category saw net inflows of over $220 billion in 2025 with momentum continuing into 2026 at roughly $75 billion year-to-date.

Investors are clamoring for foreign equities investments. Foreign equities ETFs performed very well in 2025, and many market outlooks see potential for strong repeat performance in 2026.

A momentum strategy can be especially useful for investors looking outside the U.S.

After a decade of US equity dominance, the iShares MSCI EAFE ETF ( NYSEARCA:EFA ) has shown strong recent performance, marking a potential turning point for investors who watched international developed markets trail US counterparts during the past ten years.