Want to Invest Globally? IEFA Offers Broader Diversification Than EEM.

Core Insights - The iShares MSCI Emerging Markets ETF (EEM) has shown recent outperformance with a focus on emerging markets, while the iShares Core MSCI EAFE ETF (IEFA) offers lower costs, higher yield, and broader developed-market diversification [1][2] Cost and Size Comparison - IEFA has an expense ratio of 0.07%, significantly lower than EEM's 0.72% - IEFA's one-year return is 31.8%, while EEM's is 33.3% - IEFA offers a dividend yield of 3.5%, compared to EEM's 2.1% - IEFA has assets under management (AUM) of $170.4 billion, while EEM has $25.1 billion [3][4] Performance and Risk Comparison - Over five years, IEFA's maximum drawdown is -30.41%, while EEM's is -39.82% - A $1,000 investment in IEFA would grow to $1,307 over five years, compared to $1,044 for EEM [5] Portfolio Composition - EEM holds 1,214 stocks, with significant allocations in Technology (30%), Financial Services (21%), and Consumer Discretionary (12%) - Top holdings in EEM include Taiwan Semiconductor Manufacturing (12.6%), Tencent Holdings (4.5%), and Samsung Electronics (4.5%) [6] - IEFA contains 2,591 developed-market stocks, with major sector weightings in Financial Services (23%), Industrials (20%), and Healthcare (11%) - Leading positions in IEFA include ASML Holding (2.1%), Roche Holding (1.3%), and HSBC (1.2%), indicating a more diversified approach [7] Investment Implications - IEFA serves as a low-cost index fund for global stock market exposure, with over 2,500 stocks and minimal concentration risk - EEM focuses on higher-risk emerging markets with greater growth potential but also higher fees and concentration risk [10][11]