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2016 Charts of the Week

Top Ten Countries in the MSCI EAFE Index (as of 6/30/16)

Chart of the Week for July 22, 2016 - July 28, 2016

All of the top 10 MSCI EAFE index countries posted negative returns in the twelve month period ended June 30, 2016, compared to seven of the top ten countries posting negative returns in the twelve month period ended June 30, 2015.

The Morgan Stanley Capital International ("MSCI") Europe, Australasia, and Far East Index ("EAFE") is a benchmark commonly used to measure non-U.S. developed country stock market performance and the MSCI Emerging Markets ("EM") Index is a benchmark commonly used to measure emerging country stock market performance. Each index consists of approximately twenty countries and a country cannot be a member of both benchmarks. The bar chart above shows the net performance in U.S. dollars for the one-year periods ended June 30, 2016 ("current" period) and June 30, 2015 ("prior" period) for the MSCI EM Index, the MSCI EAFE Index, and the top 10 non-U.S. developed countries. The top 10 countries were determined by their market capitalization in the MSCI EAFE Index as of June 30, 2016. The country with the largest market capitalization (Japan) is listed first, and the country with the smallest market capitalization of the ten countries reported (Sweden) is listed last.

Developed countries stocks had a negative return of -10.16% in the current period (dark blue bars above), in contrast with a negative return of -4.22% in the prior period (light blue bars above). In the current period, all countries posted negative returns compared to the prior period when seven of the ten countries posted negative returns. Concerns about global growth and central bank monetary policies, including negative interest rates in Japan and some Eurozone countries, have impacted developed market returns. The Brexit vote in the United Kingdom late in the current period added volatility to the markets.

Emerging market stocks fell -12.06% in the current period, compared with a negative return of -5.12% in the prior period. Factors impacting emerging market stocks included continued concerns over the growth of the Chinese economy and volatility in global commodity prices.

No one can be certain in which direction individual countries or entire markets will move in the future, as past trends are no guarantee of future results. It is important to understand the principles of domestic and international markets and diversification before investing.

© Copyright 2018 ICMA Retirement Corporation, All Rights Reserved. This information is intended for educational purposes only and is not to be construed as investment advice or a solicitation to buy or sell securities. Investors should seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed here. Past performance is not necessarily indicative of future performance.

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