XEF - ETF Overview
A Comprehensive Guide to the iShares Core MSCI EAFE IMI Index ETF (XEF)
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iShares Core MSCI EAFE IMI Index ETF (XEF) - Snapshot
Overview
The iShares Core MSCI EAFE IMI Index ETF (XEF) is a low-cost, long-term growth investment that provides exposure to over 2,500 stocks from Europe, Asia, and Australia.
Investment Strategy
XEF aims for long-term capital growth by tracking the MSCI EAFE Investable Market Index. This index includes stocks from 21 developed markets outside of North America, covering nearly all stocks in the investable market. The fund uses a market-cap-weighted approach, meaning larger companies have a bigger impact on the fund's performance.
The MSCI EAFE Investable Market Index (IMI) is an equity index that captures large, mid, and small cap representation across developed markets countries around the world, excluding the United States and Canada.
Top Holdings
The primary holdings of XEF comprise significant global corporations like Novo Nordisk, ASML, SAP, and Nestlé, among others.
Sector Allocation
XEF's sector allocation is diversified across various industries.
Geographical Breakdown
XEF offers exposure to a wide array of developed markets outside North America, predominantly in Europe (60%) and Asia (30%).
Risk Level
MEDIUM - based on geographical diversification in regions that carry risks associated with the economic and political conditions of those areas, as well as other factors such as currency and sector allocation.
Performance
XEF has delivered an average annualized return of approximately 7.89% since its inception.
Expense Ratio
The management expense ratio (MER) for XEF is 0.22%, which is relatively low compared to many other ETFs.
This means that for every $1,000 invested, the annual cost would be $2.20.
Dividend Yield
XEF offers a dividend yield between 2.50% and 3.00%, with distributions paid semi-annually.
This means that if you invest $1,000 in this ETF, you can expect to receive approximately $25 to $30 in dividends over a year, assuming the yield remains constant.
Other Information
Currency: CAD
Inception Date: April 10, 2013
Assets Under Management: $9.01 billion (as of November 2024)
Similar Alternatives
Here are some similar alternatives to the iShares Core MSCI EAFE IMI Index ETF (XEF):
Vanguard FTSE Developed All Cap ex North America Index ETF (VIU): This ETF tracks the FTSE Developed All Cap ex North America Index, offering exposure to developed markets outside North America.
BMO MSCI EAFE Index ETF (ZEA): This ETF also provides exposure to developed markets in Europe, Australasia, and the Far East, similar to XEF. It has a competitive fee structure and a similar investment strategy3.
Vanguard FTSE Developed All Cap ex U.S. Index ETF (VEF): This Vanguard ETF tracks a broad global equity index that offers exposure to all developed markets excluding the U.S
TD International Equity Index ETF (XIN): Provides exposure to a broad range of international stocks from developed markets outside of North America.
Mackenzie International Equity Index ETF (MIE): Tracks the performance of the MSCI EAFE Index, similar to ZEA.
AGFiQ International Equity ETF (AGT): Offers exposure to international equities from developed markets outside of North America.
Here's a comparison of the expense ratios, yield, and performance of the XEF ETF and its close alternatives:
Target Investors
The iShares Core MSCI EAFE IMI Index ETF (XEF) is designed for investors seeking broad exposure to international developed markets. It's suitable for:
Long-term investors: Those looking to invest for the long term and benefit from the growth of international markets.
DIY (Do-It-Yourself) investors: Individuals who prefer managing their own investment portfolios.
Retirement savers: People saving for retirement through accounts like RRSPs, RRIFs, and TFSAs.
Young professionals: Early-career individuals with a higher risk tolerance and a longer investment horizon.
Conservative investors: Those seeking a diversified portfolio to reduce risk.
XEF's diversified, cost-effective, and passive management strategy renders it a compelling choice for those seeking exposure to international developed markets.
Reason to Invest…
Diversification: XEF provides exposure to a broad range of international developed markets, reducing country-specific risk.
Low Cost: With a management expense ratio (MER) of just 0.22%, it's one of the more affordable options for international exposure.
Steady Dividends: XEF offers a decent dividend yield, averaging around 2.94%.
Long-Term Growth: Historically, XEF has shown strong long-term performance.
Reputable Provider: iShares, managed by BlackRock, is a well-known and trusted provider of ETFs, ensuring reliability and transparency.
Ease of Access: As an ETF, XEF is easily accessible and can be bought and sold like any other stock on major exchanges.
Reason Not to Invest…
Currency Risk: Investing in international markets introduces currency risk, which can impact returns.
Market Volatility: The ETF includes stocks from various sectors and countries, which can lead to fluctuations in performance based on market conditions.
Limited Sector Exposure: XEF has significant exposure to sectors like financial services, industrials, and healthcare, which can be affected by market cycles and economic changes.
Lack of Small-Cap Exposure: While XEF provides broad market exposure, it may have limited representation of smaller-cap stocks compared to some other international ETFs.
Performance Lag: During periods of strong performance in North American markets, XEF might lag behind due to its exclusion of U.S. and Canadian stocks.