This could be one reason for a more agressive buy and hold position for the I fund
Full story can be read at
http://www.nytimes.com/2006/04/09/business/mutfund/09index.html
Active stock fund managers, meanwhile, were able to beat the EAFE index simply by being underweight in Japan.
But times have changed. Because of a long bear market in Japanese equities — along with a change in the way MSCI builds its index — Japanese stocks now make up only about one-quarter of the EAFE index.
What's more, Japanese stocks are staging a comeback. Though Japanese stock funds trailed their foreign counterparts in the first quarter, returning 4.2 percent, they were up more than 42 percent over the last year.
While E.T.F.'s are popular among institutional investors, individuals have begun to embrace them as well, because of low costs and ease of use. Barclay's iShares MSCI EAFE Index fund, for example, is now one of the biggest international portfolios, with $27.5 billion in assets.
Market watchers expect foreign indexing to become even more popular as investors embrace foreign stocks and as more broad-based international indexes are created.
