Charts of the Week

Top 10 Countries in the MSCI EAFE Index (as of 12/31/19)

Chart of the Week for January 17, 2020 - January 23, 2020

Both the MSCI EAFE Index and the MSCI EM Index posted positive returns in 2019.

The Morgan Stanley Capital International ("MSCI") Europe, Australasia, and Far East Index ("EAFE") is a commonly used benchmark to measure non-U.S. developed country stock market performance and the MSCI Emerging Markets ("EM") Index is a commonly used benchmark to measure emerging market stock market performance. Each index consists of about twenty countries and a country can be a member of the MSCI EAFE or EM Index, but not both. The bar chart above shows the net performance in U.S. dollars for the one year periods ended December 31, 2019 and December 31, 2018 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 December 31, 2019. The country with the largest market capitalization (Japan) is listed first, and the country with the smallest market capitalization of the ten countries shown (Sweden) is listed last.

From the perspective of a U.S. dollar-based investor, both the emerging and developed market index, and all 10 countries posted positive double-digit returns in 2019 after all posted negative returns in 2018. Global factors contributing to the positive returns included an easing of trade tensions between the U.S. and China in the fourth quarter as well as stimulus provided by central banks. Specific to European markets, the monetary stimulus overcame concerns about slowing growth, and the election results in Britain in December made Brexit more likely. Emerging Market stocks were helped by strong returns in growth stocks and outperformance in the technology sector.

No one can be certain 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 2019 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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