The MSCI EAFE Index is a stock market index that is designed to measure the equity market performance of developed markets outside of the U.S. & Canada. It is maintained by MSCI (formerly Morgan Stanley Capital International), The EAFE acronym stands for Europe, Australasia and Far East.
The index is market capitalization weighted (meaning that the weight of securities is based on their respective market capitalizations). It first ranks each stock in the investable universe from largest to smallest by market capitalization. The largest 70% will compose the MSCI EAFE Large Cap (new index), the largest 85% will compose the MSCI EAFE Standard, and the largest 99% will compose the MSCI Investable Market index (“IMI”). The 71st to 85th percentiles represent the MSCI EAFE Mid Cap, and the 85th to 99th percentiles represent the MSCI EAFE Small Cap.
The index includes a selection of stocks from 21 developed markets, but excludes those from the U.S. and Canada. The index has been calculated since 31 December 1969, making it the oldest truly international stock index.