Forget US Dominance for Now: EFA Outperforms SPY With 2.34% Gain While S&P Slips

Core Insights - US stocks have started 2026 on a negative note, with the S&P 500 down 1.4% year-to-date, while developed international equities have shown positive performance, highlighting the importance of geographic diversification for retirees [2][5] Fund Overview - The iShares MSCI EAFE ETF (EFA) tracks large- and mid-cap equities in developed markets outside the US and Canada, with $77.8 billion in assets and a competitive annual fee of 32 basis points [3] - EFA's top holdings include major global companies such as ASML, Roche, AstraZeneca, and Nestle, reflecting a buy-and-hold strategy with a low annual portfolio turnover of 4% [4] Performance Analysis - EFA has gained 2.34% year-to-date, contrasting with the 1.4% decline of the SPDR S&P 500 ETF Trust (SPY), driven by dollar weakness and a shift towards more affordable international valuations [5][8] - Over the past twelve months, EFA has returned 21.82%, outperforming SPY's 17.4%, although US equities have historically shown stronger growth over longer periods [6][8] Income Considerations - EFA provides dividends twice a year, with 2025 distributions totaling $3.25, resulting in a current yield of 2.29%, which is lower than the 10-year Treasury yield of 4.13%, indicating that EFA serves as an income supplement rather than a direct bond replacement [7]