EAFE Index

What Is the EAFE Index?

The EAFE Index is a stock index offered by MSCI that covers non-U.S. and Canadian equity markets. It serves as a performance benchmark for the major international equity markets as represented by 21 major MSCI indices from Europe, Australasia, and the Middle East.

The EAFE Index is the oldest international stock index and is commonly called the MSCI EAFE Index.

Key Takeaways

  • The EAFE is a broad market index of stocks located within countries in Europe, Australasia, and the Middle East.
  • Developed by Morgan Stanley Capital International (MSCI) in 1969, the EAFE Index contains more than 900 stocks from 21 countries.
  • Investors and asset managers often use the EAFE Index as a performance benchmark for global developed market equities.

Understanding the EAFE Index

The EAFE Index was created to reflect the performance of mid- and large-cap stocks across 21 developed market countries—the Europe, Australasia, and the Far East (EAFE). The index was developed by Morgan Stanley Capital International (MSCI) in 1969 and lists more than 874 stocks from 21 countries in the EAFE. As of June 30, 2021, the list of countries by region are provided in the table below:

MSCI EAFE Index Countries





Middle East









Hong Kong










New Zealand




United Kingdom



The EAFE Index is a market-capitalization-weighted index; its individual components are weighted according to their market capitalization. This means that countries with the largest stock markets, such as Japan and the United Kingdom, will have the largest relative weighting in the index. In addition, changes in the market value of larger securities will result in a bigger move in the index than changes in the market value of smaller stocks. The largest 70% securities in the MSCI EAFE Index constitute the index' large-cap stocks, the 71st to 85th percentiles are the EAFE Mid-Cap, and the 85th to 99th percentiles represent the EAFE Small Cap.

As of June 30, 2021, equities from the Japanese stock markets accounted for the index's largest allocation at 23.19%. The top four countries in the EAFE Index, following Japan, include the United Kingdom (14.38%), France (11.52%), Switzerland (9.8%), and Germany (9.41%).

The top 10 company listings on the index were:

  1. Nestle
  2. ASML Holdings
  3. Roche Holding Genuss
  4. LVMH Moet Hennessy
  5. Novartis
  6. Toyota
  7. AstraZeneca
  8. Unilever
  9. AIA Group
  10. SAP

These companies account for $2.13 trillion in market-cap value, or 12.55%, of the index's market capitalization.

The financial sector of the EAFE has the highest weighting in the index. The table below shows the sectors represented in the MSCI EAFE Index and their respective weights:

MSCI EAFE Index Sectors
Sector Weight (%)
Financials 16.96
Industrials 15.5
Consumer Discretionary 13.03
Health Care 12.41
Consumer Staples 10.52
Information Technology 9.14
Materials 7.91
Communication Services 4.89
Utilities 3.4
Energy 3.22
Real Estate 3.03


Another index, developed by MSCI Inc., which represents the performance of the global market is the MSCI ACWI (All Country World Index). The ACWI lists 2,491 assets from 47 countries composed of 23 developed countries and 24 emerging economies. Both indices provide a transparent vehicle that can be used by institutional investors to take advantage of profitable investments from multiple capital markets in the world. In comparison, the table below shows the annual performance of both indices from 2007 to 2020:

Annual Performance (%)
2020 7.82 16.25
2019 22.01 26.60
2018 -13.79 -9.41
2017 25.03 23.97
  2016 1.00 7.86
  2015 -0.81 -2.36
  2014 -4.90 4.16
  2013 22.78 22.80
  2012 17.32 16.13
  2011 -12.14 -7.35
  2010 7.75 12.67
  2009 31.78 34.63
  2008 -43.38 -42.19
  2007 11.17 11.66

EAFE Index as a Benchmark

Institutional investors and asset managers use the EAFE index as a performance benchmark for the international developed equity market. By comparing the performance of funds to that of the EAFE Index, a manager can ascertain whether they are adding value to their clients' portfolios. Investors and portfolio managers who want an increased level of diversification beyond the U.S. and Canadian equity borders can include stocks from the EAFE in their portfolios. This can typically be done by purchasing index-linked financial products, such as exchange-traded funds (ETFs).

An example of an ETF that tracks the investment results of the EAFE Index is the iShares MSCI EAFE ETF (EFA). The EFA has net assets of $57.2 billion with a 0.32% expense ratio, as of July 2021. Other ETFs that mirror the performance of the EAFE Index are iShares Core MSCI EAFE (IEFA) and the iShares MSCI EAFE Small-Cap (SCZ) ETFs.

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  1. MSCI. "MSCI EAFE Index (USD)." Accessed July 12, 2021.

  2. iShares. "iShares MSCI EAFE ETF." Accessed July 12, 2021.