By any standard the, iShares MSCI EAFE Index Fund (NYSE:
) is big. With almost $41.8 billion in assets under management,
the ETF is one of the biggest
by that metric of any stripe. EFA is also heavily traded with
average daily volume north of 17.4 million shares over the last
More important than those superficial metrics is the potential
EFA is showing to make a big move to the upside. This according
to noted technical analyst Chris Kimble of
Kimble Charting Solutions
Kimble points out that EFA is facing horizontal resistance
around the $59.15 area as well as diagonal resistance brought on
by downtrend line going back to the ETF's
. The right shoulder of a head and shoulders pattern may also be
forming in EFA as well, according to Kimble.
The head and shoulders pattern is usually viewed by technical
analysts as a bullish reversal pattern, often spotted when a
security is in an uptrend. EFA fits the bill. The ETF is just
pennies below its 52-week high and has gained almost seven
percent in the past three months.
"The global community would benefit if EFA can break from this
pattern," said Kimble.
That statement could prove to be accurate because EFA's heft
gives it marquee status among ETFs focusing on non-U.S. developed
market equities. The Vanguard MSCI EAFE ETF (NYSE:
), Vanguard's answer to EFA, is displaying similar bullish traits
and is also up about seven percent in the past 90 days.
Investors should note what countries are the primary drivers
of EFA's price action. While the fund is light on the most
volatile Eurozone members such as Spain and Italy (those two
represent barely over fiver percent of EFA's weight), the U.K.
and Japan combine for almost 42 percent of the ETF's weight. No
other countries garner double-digit allocations within EFA, but
Australia and Switzerland each account for more than nine percent
of the ETF's weight.
Investors looking for lower volatility alternatives to EFA can
consider the iShares MSCI EAFE Minimum Volatility Index Fund
). EFAV, which has almost $416 million in AUM, has a weight to
financial services stocks that is about 600 basis points less
than EFA's while featuring an allocation to staples stocks that
is about 500 points higher. EFAV is up 5.5 percent in the past 90
Another alternative to consider is the PowerShares S&P
International Developed Low Volatility Portfolio (NYSE:
), which tracks the S&P BMI International Developed Low
Volatility Index. IDLV is Japan-heavy as that country accounts
for nearly 39 percent of the ETF's weight. Canada and the U.K.
combine for another 32 percent.
IDLV has a 30-day SEC yield of 4.37 percent and a
price-to-book ratio of 1.55,
according to PowerShares data
. EFA has a 30-day SEC yield of 3.61 percent and a price-to-book
ratio of 2.62.
For more on ETFs, click
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