The MSCI EAFE Index tracks large and mid-sized companies across 21 developed markets, excluding the U.S. and Canada. It offers investors access to high-quality companies from regions such as Europe, Australia, and Asia.
If you want equity exposure outside the U.S. but still prefer strong, established businesses, this index may be a good choice. Many experts believe that the U.S. market is now overvalued, and if you share that view, the MSCI EAFE Index provides an alternative source of growth.
For those already invested in U.S. equities or S&P 500 ETFs:
Adding exposure to the MSCI EAFE Index can improve diversification. It complements U.S. holdings well by covering geographic markets and sectors that often move differently from American stocks.
We have slightly reduced our U.S. equity exposure, though they remain a core part of our model portfolios. You can read more about this in our latest Quarterly Note, just email us at [email protected] for a copy.
The MSCI EAFE Index is mainly composed of Financials, Industrials, and Healthcare—key sectors that drive growth outside the U.S. Its components are also generally less expensive, show steady price momentum, and have lower volatility than U.S. companies. This balance makes it a practical addition to a U.S.-heavy portfolio.
When we compared the S&P 500 Index and MSCI EAFE Index to a 50/50 blended portfolio of both, the results showed that the blended approach had lower volatility while still maintaining competitive returns. This mix can help reduce downside risk over time which are suitable for growth clients.
- S&P 500: 111.30%
- 50/50 S&P 500 and MSCI EAFE: 97.08%
- MSCI EAFE: 81.91%
For investors interested in the MSCI EAFE Index, Astra Worldwide offers regular savings products that invest directly in it. Through dollar-cost averaging, you can take advantage of market fluctuations by buying more units when prices are low and fewer when prices are high, helping smooth out long-term returns.
These investment products are highly attractive because they offer a 100% capital guarantee after 10 years and 140% after 15 years, similar to low-risk investments that provide steady annual growth. You protect your invested capital from downside risk while benefiting from the performance of the MSCI EAFE Index, subject to eligibility.
Aside from the MSCI EAFE Index, Astra Worldwide also offers S&P 500 Index funds, diversified portfolios, and financial advice designed to help you reach your investment goals. To learn more, reach out to your Astra Worldwide advisor or email us at [email protected] anytime.
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