iShares MSCI EAFE Value ETF

EFV

Market cap $27.3B

Low valuations offer compelling upside for these international ETFs.

The iShares MSCI EAFE Value ETF invests in stocks outside the United States and Canada, following a value-based approach. This selection methodology has resulted in EFV being heavily allocated to cyclical sectors such as financials and industrials, while notably underweight in information technology. As such, EFV can act as a nice complement to investors worried about their AI exposure, or alternatively, to investors in long-dated bond ETFs.

Investors can eye global equity funds as AI bubble fears, U.S. market risks and Fed easing fuel demand for international diversification.

Tumult in U.S. markets this year has prompted investors to search abroad for investment opportunities. While the S&P 500 has recovered from its early-April tariff-related dip, a number of international and value exchange-traded funds (ETFs) have managed to easily outperform its year-to-date (YTD) returns of 10.2%.

I have a buy rating on iShares MSCI EAFE Value ETF, citing strong momentum and attractive valuations in EAFE value stocks. Value stocks are outperforming growth internationally, especially in Europe, with EFV offering broad exposure to undervalued developed markets. EFV boasts high liquidity, a solid dividend yield, and favorable risk metrics, but is heavily weighted toward financials and lacks tech exposure.

SPY, THRO, EFV, TLT and QQQ led ETF inflows last week as investors poured in $23.5B despite rising yields and renewed U.S.-EU trade tensions.

The weakening U.S. dollar threatens American investors' wealth and net worth; diversifying with foreign equities like the EFV ETF is a prudent hedge. EFV offers broad exposure to value stocks outside the U.S. and Canada, trades at a deep discount to the S&P 500, and yields over 2x that of the S&P 500. Despite lagging U.S. markets historically, EFV is now outperforming as global investors shift away from U.S. assets amid U.S. dollar weakness and suspect U.S. foreign policies.

Market volatility, driven by political chaos, can be mitigated by diversifying investments into stable multinational companies outside the US, like those in EFV. EFV, an iShares MSCI EAFE Value ETF, offers exposure to top global firms, reducing portfolio volatility compared to US-only investments. EFV includes industry leaders like Roche, Shell, and Toyota, providing a diversified, less erratic investment option with a strong historical performance.

With the election of Donald Trump, the markets will look for the best ETFs. So says Larry Glazer of Mayflower Advisors.

Active ETF supply and demand has accelerated in 2024. We believe a new active product from iShares is one to watch.