EAFE index

EAFE index

See: European Australian and Far East index

Morgan Stanley Capital International Europe, Australia, Far East Index

An index published by Morgan Stanley Capital International that tracks stocks in Europe, Australia, and East Asia. It is considered one of the most important indices for stocks outside the United States; indeed, its strong performance in the 1980s and early 1990s has been credited with spurring American interest in foreign investment. It is weighted for market capitalization.

EAFE Index.

The Morgan Stanley Capital International (MSCI) EAFE -- for Europe, Australasia, Far East Equity -- Index tracks the performance of the world's major stock markets outside the United States.

The EAFE Index is an important benchmark, comparable to the Standard & Poor's 500 Index (S&P 500) for US large-company stocks. Managers of international stock portfolios use the EAFE to monitor the ups and downs of developed markets and evaluate their own investment performance in relation to that standard.

Investors can purchase index mutual funds, exchange traded funds (ETFs), options contracts, and financial futures contracts linked to the EAFE to gain exposure to worldwide equities markets.

The strong performance of the EAFE Index between 1982 and 1996 is often credited with generating increased US interest in investing overseas.