The MSCI EAFE Index is a widely recognized international equities index of large companies across developed countries in Europe, Australasia and the Far East, excluding the U.S. and Canada. The MSCI EAFE Index includes equities across a range of industries and regions, providing broad opportunities for growth.
Equities from the United Kingdom, Japan, France and Germany account for more than 60% of the Index. Individual companies represented include Nestle, Toyota Motor Corp and Bayer — companies with a strong historical track record of positive returns. The MSCI EAFE Index includes ten market sectors including financials, health care and energy.
The United States represents only 41% of the total global stock market.2 The remaining 59% of the world’s equities are traded on markets in Paris, London, Berlin, Singapore and beyond. In an increasingly global economy, international markets provide substantial growth opportunities. In fact, the World Bank forecasts world economic growth to exceed the growth in the United States in each of the next three years.3
MSCI EAFE is the oldest international equities index and includes a selection of stocks from 21 countries. MSCI EAFE selects stocks from developed markets providing the opportunity to participate in returns from international companies while limiting exposure to emerging markets.4 The MSCI EAFE is reviewed quarterly to reflect changes in the international equities market.5
MSCI EAFA developed markets countries
Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, United Kingdom7
For more information about MSCI EAFE, please visit www.msci.com/eafe
Chart assumptions: Index growth from 12/31/2005 – 12/31/2015. Calendar year-end returns are the percentage change between the closing price on December 31 of the year noted and December 31 of the prior year. Past performance is not an indicator of or guarantee of future performance.
MSCI EAFE provides an international equities opportunity with nearly 30 years of live history. Domestic indices such as the S&P 500® Index exclude international equities markets and a majority of the world’s equities. The table below illustrates how the MSCI EAFE price index and the S&P 500® price index have performed over the last 10 years.
1 Source: MSCI. MSCI EAFE is one of MSCI’s oldest indices, dating back to 1969. MSCI EAFE’s long history makes it one of the most popular benchmarks of international equities.
2 Source: World Bank, Global Economic Prospects, 2016.
3 Source: World Bank, Global Economic Prospects, 2016. The MSCI EAFE Index is designed to represent the performance of large and mid-cap securities across 21 developed markets excluding the U.S. and Canada. A portion of the world GDP could include emerging markets, which are countries in the process of rapid development with less mature markets and regulations, as well as the developed markets tracked by the MSCI EAFE Index.
4 Limiting exposure to emerging markets may reduce potential volatility but may also reduce potential short-term returns of emerging markets countries experiencing rapid growth.
5 Semi-annual index reviews in May and November rebalance the index and establish the large and mid capitalization cutoffs.
6 Source: MSCI Indexes
7 As of August 31, 2016. Developed markets are advanced economies with strong institutions and high levels of per capita income.
Fixed indexed annuities are not an investment and do not directly participate in the stock market or any index. International investing could involve risk such as currency, economic, geographical, political and differences in accounting standards. The MSCI EAFE Index is unmanaged and cannot be invested into directly, and past performance is not indicative of future results.
Neither Nationwide nor any of its affiliates are affiliated with MSCI Inc. or its affiliates.
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