Make a Global Play On Equities Sans U.S., Canada With "IEFA"

Getting global diversification via equities can be a tricky endeavor now that the COVID-19 pandemic is once again roiling the capital markets with an increased number of cases. Nonetheless, getting global exposure doesn’t have to be a pain if you know where to look and one place to start is the iShares Core MSCI EAFE ETF (IEFA).

The fund seeks to track the investment results of the MSCI EAFE IMI Index composed of large-, mid- and small-capitalization developed market equities, excluding the U.S. and Canada. The fund generally will invest at least 90% of its assets in the component securities of the underlying index and in investments that have economic characteristics that are substantially identical to the component securities of the underlying index.

The index is designed to measure large-, mid-, and small-capitalization equity market performance and includes stocks from Europe, Australasia and the Far East.

IEFA gives investors:

  1. Exposure to a broad range of companies in Europe, Australia, Asia, and the Far East
  2. Low cost, comprehensive access to stocks in developed international countries
  3. Use at the core of a portfolio to diversify internationally and seek long-term growth

IEFA Chart

As more economies look to close out 2020 strong with a solid Q4, getting global exposure now can set an investor up for future gains. Without the U.S. and Canada in IEFA, investors will get pure play exposure to other country concentrations.

Furthermore, IEFA has a cost-effective 0.07% expense ratio. That’s a small price to pay for what lies ahead and according to global investment firm Goldman Sachs, the future looks bright.

“Goldman Sachs is anticipating a more “V-shaped” recovery for the global economy than consensus forecasts suggest, and the rebound could now be bigger than expected as hopes rise that a coronavirus vaccine is close,” a CNBC article noted. “In Goldman’s 2021 global economic outlook, published at the weekend, analysts highlighted that Democrats’ fiscal policy agenda could run into roadblocks as they looked unlikely to command a majority in the Senate. Despite this, the analysts still expect the implementation of a $1 trillion fiscal package in the U.S., potentially before Biden’s expected inauguration on Jan. 20.”

“More important to the growth outlook, Goldman Sachs Chief Economist Jan Hatzius and his team suggested, will be the new wave of coronavirus infections sweeping through Europe and the U.S., with a number of major European economies returning to partial lockdown measures,” the article added.

For more news and information, visit the Equity ETF Channel.