It is a passive ETF managed by BlackRock iShares that tracks the broad MSCI EAFE index. It provides automatically diversified, market-cap-weighted exposure to large-, mid- and small-cap stocks in developed markets outside the US and Canada.

It suits long-term asset allocators who want to add global diversification to a portfolio concentrated in the US market, as well as global core investors who need exposure to developed-market stocks outside the US and Canada.

It is an ETF run by BlackRock iShares using a passive (index-tracking) management approach.

It uses a passive strategy designed to provide broadly diversified exposure to large-, mid- and small-cap stocks in developed markets outside the US and Canada. It carries heavy weightings in Europe and Japan and also includes other developed markets such as Australia, Hong Kong and Singapore, so the diversification benefit is substantial.

• Core lineup product tracking the MSCI EAFE
• Broad coverage that includes developed-market small caps
• Ultra-low expense ratio typical of the iShares Core lineup

Assets under management (AUM) are $189.3B, and the expense ratio is 0.07% per year.

VEA, VXUS, EFA, VT and VEU shown in the table are all classified as ETFs with global exposure outside the US, but their holdings differ because of differences in the tracked index (MSCI vs. FTSE) and coverage (developed vs. including emerging markets, and whether the US and Canada are included).

It has shown relatively lower volatility than the US market, though short-term volatility has widened somewhat during periods of multi-currency exchange rate swings. The diversification benefit can stand out when the European and Japanese economic cycles diverge from US market trends.

It belongs to the group of mega ETFs with deep demand for global diversification and a steady inflow of core asset allocation money. Inflows can also become more pronounced when concerns about US market valuations come to the fore.

Its main strengths are an ultra-low expense ratio and broad diversification across developed markets outside the US and Canada, while currency volatility and the absence of emerging markets are drawbacks to consider in advance.

VEA shown in the table is a direct substitute that tracks the FTSE Developed index, with some differences in whether South Korea and Canada are included. EFA tracks the same MSCI EAFE but tends to charge a higher expense ratio, VXUS and VEU are broadly diversified ex-US variants that also include emerging markets, and VT is a global ETF that includes the US as well. If you want to add emerging-market weighting separately, you can also consider complementary ETFs such as VWO and IEMG.

Here are the points to review before investing in IEFA. Broad diversification across developed markets outside the US and Canada is its strength, but it is advisable to double-check the effects of currency volatility, the absence of emerging markets and regional concentration before buying, and to review your holding weight and diversification strategy together.

Multi-currency exchange rate swings, European and Japanese economic fluctuations, and the absence of emerging markets are the main factors behind short-term volatility and diversification limits. It is worth considering combinations with complementary ETFs as well.

It is regarded as a standard choice for a core holding with broad diversification across developed markets outside the US and Canada. If you want South Korea and Canada included, VEA is a suitable alternative; if you need broad diversification that also covers emerging markets, VXUS; and for worldwide diversification, VT.