International stocks via IEFA ETF match S&P 500 gains with better diversification and dividends.

The iShares Core MSCI EAFE ETF (IEFA), which invests in developed international markets excluding the U.S., has kept pace with the S&P 500 over the past year despite the tech rally. It offers better diversification across 2,600 stocks, a lower expense ratio (0.07%), and a higher dividend yield (3.38%) compared to the S&P 500. With U.S. stocks heavily concentrated in mega-cap tech firms and trading at high valuations, international stocks present a less frothy alternative with potential for growth, especially if cyclical valuation and currency trends favor them. Most investors should hold IEFA for diversification but consider more selective international ETFs for market-beating returns.