iShares' Core ETF Has Been Beating the S&P 500 for 3 Years And Nobody's Talking About It

"Over the trailing 12 months through early March 2026, the iShares Core MSCI EAFE ETF (IEFA) returned +22.88%, outpacing the S&P 500's +17.69% over the same stretch. For a fund that spent years dismissed as dead weight in a US-dominated bull market, that gap is worth paying attention to."

"IEFA tracks the MSCI EAFE IMI Index, giving investors broad exposure to large-, mid-, and small-cap equities across developed markets outside the US and Canada. With $172.4 billion in assets and an expense ratio of 0.07%, it is one of the most cost-efficient ways to own international developed market stocks."

"Three risks matter here. First, currency exposure is unhedged, so a strengthening US dollar directly compresses returns for American investors regardless of how underlying businesses perform. Second, the fund's underweight to technology relative to the S&P 500 has historically been a drag during periods when US mega-cap tech leads."

IEFA tracks the MSCI EAFE IMI Index, providing broad exposure to large-, mid-, and small-cap equities across developed markets outside the US and Canada. With $172.4 billion in assets and a 0.07% expense ratio, it offers cost-efficient international diversification. The fund is geographically anchored in Japan, the United Kingdom, France, Switzerland, and Germany, with significant exposure to Financials and Industrials sectors. The 2.37% dividend yield provides meaningful income, with dividends growing from $2.25 per share in 2023 to $3.18 in 2025. However, unhedged currency exposure, underweight technology positioning, and a five-year return lag versus the S&P 500 present structural tradeoffs investors must consider.

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