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

1 week ago 9

Matt DiLallo, The Motley Fool

Sun, January 25, 2026 astatine 1:35 PM CST 4 min read

EEM has delivered a higher one-year instrumentality but lags IEFA implicit 5 years.
IEFA charges a overmuch little disbursal ratio and yields much successful dividends than EEM.
EEM is much concentrated successful exertion and emerging-market giants, portion IEFA spreads its holdings crossed developed markets with broader coverage.
These 10 stocks could mint the adjacent question of millionaires ›

The iShares MSCI Emerging Markets ETF (NYSEMKT:EEM) stands retired for its caller outperformance and emerging-markets focus, but the iShares Core MSCI EAFE ETF (NYSEMKT:IEFA) offers little costs, a higher yield, and broader developed-market diversification.

Both EEM and IEFA are large, liquid exchange-traded funds tracking planetary stocks, but they people chiseled regions: EEM focuses connected emerging markets, portion IEFA covers developed markets extracurricular the U.S. and Canada. This examination looks astatine the cost, performance, risk, and portfolio differences to assistance investors determine which ETF whitethorn amended acceptable their goals.

Metric

IEFA

EEM

Issuer	IShares	IShares
Expense ratio	0.07%	0.72%
1-yr instrumentality (as of 2026-01-22)	31.8%	33.3%
Dividend yield	3.5%	2.1%
Beta	0.73	0.74
AUM	$170.4 billion	$25.1 billion

Beta measures terms volatility comparative to the S&P 500; beta is calculated from five-year play returns. The 1-yr instrumentality represents full instrumentality implicit the trailing 12 months.

IEFA is much affordable with a 0.07% disbursal ratio compared to EEM's 0.72%, and it besides offers a higher dividend output astatine 3.5% versus EEM's 2.1%—a meaningful quality for income-focused investors.

Metric

IEFA

EEM

Max drawdown (5 y)	-30.41%	-39.82%
Growth of $1,000 implicit 5 years	$1,307	$1,044

EEM holds 1,214 stocks, with a portfolio tilted toward Technology (30%), Financial Services (21%), and Consumer Discretionary (12%). Its apical holdings are Taiwan Semiconductor Manufacturing(NYSE:TSM) astatine 12.6%, Tencent Holdings(OTC:TCEHY) astatine 4.5%, and Samsung Electronics (005930.KS) astatine 4.5%, signaling a dense attraction successful Asia's largest tech and net companies.

In contrast, IEFA spans 2,591 developed-market stocks, with its largest assemblage weightings successful Financial Services (23%), Industrials (20%), and Healthcare (11%). Its starring positions — ASML Holding (NASDAQ:ASML) astatine 2.1%, Roche Holding (OTC:RHHBY) astatine 1.3%, and HSBC (NYSE:HSBC) astatine 1.2% — item a broader premix of European bluish chips and planetary brands. IEFA takes a much diversified attack and does not person important single-stock oregon assemblage concentration.

For much guidance connected ETF investing, cheque retired the afloat usher astatine this link.