EAFE Index

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DEFINITION of 'EAFE Index'

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.

BREAKING DOWN '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.

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