You Can Set Sail with the Biggest Overseas Fund

Doug Fabian

Doug Fabian is known for his expert knowledge of ETFs, bear funds and enhanced index funds to profit in any market climate.

In the last two weeks, we have discussed SPY and IVV, the two largest exchange-traded funds (ETF), both focused on the U.S. domestic market. The fund featured in this week’s ETF Talk takes an opposite tack with its focus on non-U.S. markets. Today’s ETF is the third-largest ETF on the market and the most popular way to invest overseas: iShares MSCI EAFE ETF (EFA).

This fund tracks the results of an index composed of large- and mid-capitalization developed market equities outside the United States and Canada. As such, it allows investors to allocate to a broad basket of foreign companies.

EFA had a rough 2014 alongside battered global markets, falling 9.33%. However, it has a gain so far in 2015 of 1.43%. The fund manages a total of $53 billion. Its holdings match the index it tracks closely, including weightings. In addition, EFA offers investors a dividend yield of 3.69%, and it has an expense ratio of just 0.33%.


EFA’s holdings fall into a variety of sectors because of its broad, general nature. It allocates the greatest portions of its portfolio to financial services, 25.44%; industrials, 12.58%; and consumer discretionary, 12.46%. EFA has 12.9% of its assets in its largest 10 positions. Among these are Nestlé S.A. (NSRGF), 1.97%; Novartis AG (NVSEF), 1.81%; Roche Holding AG (RHHVF), 1.62%; Toyota Motor Corporation (TOYOF), 1.40%; and HSBC Holdings Plc (HSBC), 1.40%.

For investors interested in a general investment in markets outside of the United States, there are a number of ways to do so, and many investors go with iShares MSCI EAFE ETF (EFA), the biggest ETF player in the overseas market.

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If you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my Successful ETF Investing newsletter. As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an e-mail. You just may see your question answered in a future ETF Talk.

In case you missed it, I encourage you to read my e-letter column from last week about a giant S&P 500 ETF. I also invite you to comment in the space provided below.

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By far, the biggest market-moving event this week was the European Central Bank’s (ECB) decision to implement the Old World version of quantitative easing (QE).

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