Skip to content

IEFA vs. EFA: What’s The Difference?

The iShares Core MSCI EAFE ETF (IEFA) and the iShares MSCI EAFE ETF (EFA) are both among the Top 100 ETFs. IEFA is a iShares Foreign Large Blend fund and EFA is a iShares Foreign Large Blend fund. So, what’s the difference between IEFA and EFA? And which fund is better?

The expense ratio of IEFA is 0.25 percentage points lower than EFA’s (0.07% vs. 0.32%). IEFA also has a higher exposure to the industrials sector and a lower standard deviation. Overall, IEFA has provided lower returns than EFA over the past ten years.

In this article, we’ll compare IEFA vs. EFA. We’ll look at performance and risk metrics, as well as at their portfolio growth and fund composition. Moreover, I’ll also discuss IEFA’s and EFA’s annual returns, holdings, and industry exposure and examine how these affect their overall returns.

TIP: Keep track of all your investments with Personal Capital. I use this amazing tool to aggregate all investments in one place and make sure I'm on track to financial freedom. Oh, and did I mention it's free? Try it out here (link to Personal Capital).

Summary

IEFAEFA
NameiShares Core MSCI EAFE ETFiShares MSCI EAFE ETF
CategoryForeign Large BlendForeign Large Blend
IssueriSharesiShares
AUM95.78B56.77B
Avg. Return5.79%6.47%
Div. Yield2.28%2.28%
Expense Ratio0.07%0.32%

The iShares Core MSCI EAFE ETF (IEFA) is a Foreign Large Blend fund that is issued by iShares. It currently has 95.78B total assets under management and has yielded an average annual return of 5.79% over the past 10 years. The fund has a dividend yield of 2.28% with an expense ratio of 0.07%.

The iShares MSCI EAFE ETF (EFA) is a Foreign Large Blend fund that is issued by iShares. It currently has 56.77B total assets under management and has yielded an average annual return of 6.47% over the past 10 years. The fund has a dividend yield of 2.28% with an expense ratio of 0.32%.

IEFA’s dividend yield is 0.00% lower than that of EFA (2.28% vs. 2.28%). Also, IEFA yielded on average 0.68% less per year over the past decade (5.79% vs. 6.47%). The expense ratio of IEFA is 0.25 percentage points lower than EFA’s (0.07% vs. 0.32%).

FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).

Fund Composition

Industry Exposure

IEFA vs. EFA - Industry Exposure

IEFAEFA
Technology9.81%9.68%
Industrials16.32%15.01%
Energy3.19%3.51%
Communication Services5.53%5.68%
Utilities3.25%3.35%
Healthcare12.01%12.8%
Consumer Defensive9.78%10.56%
Real Estate4.31%3.01%
Financial Services15.91%16.88%
Consumer Cyclical11.96%11.62%
Basic Materials7.93%7.91%

The iShares Core MSCI EAFE ETF (IEFA) has the most exposure to the Industrials sector at 16.32%. This is followed by Financial Services and Healthcare at 15.91% and 12.01% respectively. Utilities (3.25%), Real Estate (4.31%), and Communication Services (5.53%) only make up 13.09% of the fund’s total assets.

IEFA’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Defensive, Technology, Consumer Cyclical, and Healthcare stocks at 7.93%, 9.78%, 9.81%, 11.96%, and 12.01%.

The iShares MSCI EAFE ETF (EFA) has the most exposure to the Financial Services sector at 16.88%. This is followed by Industrials and Healthcare at 15.01% and 12.8% respectively. Utilities (3.35%), Energy (3.51%), and Communication Services (5.68%) only make up 12.54% of the fund’s total assets.

EFA’s mid-section with moderate exposure is comprised of Basic Materials, Technology, Consumer Defensive, Consumer Cyclical, and Healthcare stocks at 7.91%, 9.68%, 10.56%, 11.62%, and 12.8%.

IEFA is 1.31% more exposed to the Industrials sector than EFA (16.32% vs 15.01%). IEFA’s exposure to Financial Services and Healthcare stocks is 0.97% lower and 0.79% lower respectively (15.91% vs. 16.88% and 12.01% vs. 12.8%). In total, Utilities, Real Estate, and Communication Services also make up 1.05% more of the fund’s holdings compared to EFA (13.09% vs. 12.04%).

Holdings

IEFA - Holdings

IEFA HoldingsWeight
Nestle SA1.77%
ASML Holding NV1.43%
Roche Holding AG1.31%
LVMH Moet Hennessy Louis Vuitton SE1.08%
Novartis AG1.0%
Toyota Motor Corp0.92%
AstraZeneca PLC0.78%
Unilever PLC0.76%
AIA Group Ltd0.74%
SAP SE0.73%

IEFA’s Top Holdings are Nestle SA, ASML Holding NV, Roche Holding AG, LVMH Moet Hennessy Louis Vuitton SE, and Novartis AG at 1.77%, 1.43%, 1.31%, 1.08%, and 1.0%.

Toyota Motor Corp (0.92%), AstraZeneca PLC (0.78%), and Unilever PLC (0.76%) have a slightly smaller but still significant weight. AIA Group Ltd and SAP SE are also represented in the IEFA’s holdings at 0.74% and 0.73%.

EFA - Holdings

EFA HoldingsWeight
Nestle SA2.11%
ASML Holding NV1.69%
Roche Holding AG1.55%
LVMH Moet Hennessy Louis Vuitton SE1.28%
Novartis AG1.19%
Toyota Motor Corp1.09%
AstraZeneca PLC0.92%
Unilever PLC0.9%
AIA Group Ltd0.88%
SAP SE0.86%

EFA’s Top Holdings are Nestle SA, ASML Holding NV, Roche Holding AG, LVMH Moet Hennessy Louis Vuitton SE, and Novartis AG at 2.11%, 1.69%, 1.55%, 1.28%, and 1.19%.

Toyota Motor Corp (1.09%), AstraZeneca PLC (0.92%), and Unilever PLC (0.9%) have a slightly smaller but still significant weight. AIA Group Ltd and SAP SE are also represented in the EFA’s holdings at 0.88% and 0.86%.

NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).

Performance

Annual Returns

IEFA vs. EFA - Annual Returns

YearIEFAEFA
20208.55%7.92%
201922.67%21.94%
2018-14.2%-13.83%
201726.42%24.94%
20161.36%0.96%
20150.53%-0.9%
2014-4.82%-5.04%
201323.73%22.62%
20120.0%17.22%
20110.0%-12.18%
20100.0%7.52%

IEFA had its best year in 2017 with an annual return of 26.42%. IEFA’s worst year over the past decade yielded -14.2% and occurred in 2018. In most years the iShares Core MSCI EAFE ETF provided moderate returns such as in 2010, 2015, and 2016 where annual returns amounted to 0.0%, 0.53%, and 1.36% respectively.

The year 2017 was the strongest year for EFA, returning 24.94% on an annual basis. The poorest year for EFA in the last ten years was 2018, with a yield of -13.83%. Most years the iShares MSCI EAFE ETF has given investors modest returns, such as in 2016, 2010, and 2020, when gains were 0.96%, 7.52%, and 7.92% respectively.

Portfolio Growth

IEFA vs. EFA - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
IEFA$10,000$14,0085.79%
EFA$10,000$13,4606.47%

A $10,000 investment in IEFA would have resulted in a final balance of $14,008. This is a profit of $4,008 over 7 years and amounts to a compound annual growth rate (CAGR) of 5.79%.

With a $10,000 investment in EFA, the end total would have been $13,460. This equates to a $3,460 profit over 7 years and a compound annual growth rate (CAGR) of 6.47%.

IEFA’s CAGR is 0.68 percentage points lower than that of EFA and as a result, would have yielded $548 more on a $10,000 investment. Thus, IEFA performed worse than EFA by 0.68% annually.


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!

2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.

5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply

Your email address will not be published.