EFA - EFA: World Equity Exposure For A Diversified Portfolio

2024-04-25 10:54:25 ET

Summary

• The iShares MSCI EAFE ETF is a $52 billion equity exchange-traded fund that provides retail investors with overseas equity exposure in Europe, Middle East, and Asia.
• The fund excludes China and offers exposure to developed markets outside the U.S. and Canada.
• EFA is also a play on the dollar, with a secondary risk factor of short dollar exposure via its unhedged profile.
• The fund components have a low P/E ratio when compared to their American counterparts, and are set to close the valuation gap in a soft landing scenario.
• While U.S. large caps are hovering around a 20x P/E valuation metric, EFA exposes only a 14.3x factor, with a low P/B ratio of only 1.74.

Thesis

The iShares MSCI EAFE ETF ( EFA ) is an equity exchange-traded fund. The fund represents the main offering for EMEA equities aggregators (Europe, Middle East, and Africa), at a $52 billion AUM....

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