Robeco pitches Enhanced Indexing strategy to instos

Robeco has launched a new systematic strategy for institutional investors, designed to manage the Australian index's overconcentration in banks and miners.

Robeco's Enhanced Indexing strategy for equities is benchmarked against the S&P/ASX 300.

The strategy blends active and passive investment management that aims to generate alpha without taking on excessive benchmark-relative risk.

The strategy is offered as a mandate rather than a pooled fund. This means institutional investors can define risk budgets, exclusions, sustainability preferences, and implementation requirements at the outset, rather than adopting a one-size-fits-all product.

"While Australia is a concentrated market, it is broad and liquid enough to support a diversified systematic approach - where quantitative stock selection combined with disciplined risk control offers an alternative to relying on passive exposure alone," Netherlands-based Robeco head of core quant equity and head of quant portfolio management Wilma de Groot said.

"We're giving investors a way to stay close to a benchmark while managing a concentration problem that passive exposure alone doesn't solve."

The Australian strategy holds about 150 positions. It is managed by Robeco's quantitative portfolio management team in the Netherlands with support from Hong Kong-based Joshua Crabb, the head of APAC fundamental. Robeco client portfolio manager Michael Lin provides support from Sydney.

Stephen Dennis, the head of Robeco for Australia and New Zealand, said the Your Future, Your Super performance test has sharpened the focus among superannuation funds on benchmark-relative outcomes, which has increased pressure on core allocations to perform predictably and consistently, rather than relying on a small number of high-conviction stock calls.

"Australian institutional investors have been telling us they want a core equity solution that can navigate the concentration of the local market without taking on the swings that come with high-conviction active management," Dennis said.

"Bringing our globally established Enhanced Indexing capability to Australian equities is a direct response to that. It gives superannuation funds and other institutions a research-led option that stays close to the benchmark, manages risk deliberately, and can be tailored to their own requirements."

Robeco manages about $60 billion of assets in Australia. Globally, it has $450 billion in total assets under management.