EFAD, which debuted almost three years ago, follows the MSCI EAFE Dividend Masters Index, which holds members of the MSCI EAFE Index that have increased their dividends for at least 10 straight years. The index is equally weighted and contains a minimum of 40 stocks. No single sector may represent more than 30% of the index and no single country may represent more than 50%. The index is rebalanced each February, May, August and November, with annual reconstitution during the November rebalance.
The iShares Edge MSCI Min Vol EAFE ETF (NYSEArca: EFAV) is an avenue to consider for investors looking to skirt international volatility. EFAV, which turns six years old later this year, “seeks to track the investment results of an index composed of developed market equities that, in the aggregate, have lower volatility characteristics relative to the broader developed equity markets, excluding the U.S. and Canada,” according to iShares.
EFAV has performed mostly inline with EFA this year, which is impressive when considering low volatility ETFs often lag their traditional counterparts on the way up while providing more protection when stocks slide.
Investors looking for a cost-effective option for EAFE exposure can consider the iShares Core MSCI EAFE ETF (NYSEArca: IEFA). One of this year’s top asset-gathering ETFs, IEFA charges just 0.08% per year, or $8 on a $10,000 investment.