Wilma de Groot
Robeco has launched its Enhanced Indexing strategy for Australian equities. Backed by more than 20 years of live Enhanced Indexing experience, the strategy offers superannuation funds and other institutional investors a core option between passive exposure and high-conviction active management.
The Australian market-capitalisation-weighted benchmark is heavily concentrated in a small number of large banks and miners, creating significant market concentration. Traditional active management can target meaningful alpha, but large stock or sector positions often introduce more benchmark-relative risk than institutions want in a core allocation. A systematic, enhanced indexing approach, on the other hand, aims to generate meaningful alpha without taking on excessive benchmark-relative risk.
Wilma de Groot, Head of Core Quant Equity and Head of Quant Portfolio Management at Robeco, who has portfolio oversight of the strategy, said the approach was designed to address the specific challenge in the Australian market.
“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,” 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 Your Future, Your Super performance test has sharpened the focus among superannuation funds on benchmark-relative outcomes. This has increased pressure on core allocations to perform predictably and consistently, rather than relying on a small number of high-conviction stock calls.
The Australian strategy is benchmarked against the S&P/ASX 300 Index and is expected to hold around 150 positions spread across the entire universe. Tracking error is managed through Robeco’s in-house risk model, which assesses various sector, style, macro and statistical exposures together.
Because the strategy is offered as a mandate rather than a pooled fund, institutional investors can define risk budgets, exclusions, sustainability preferences, and implementation requirements at the outset, rather than adopting a one-size-fits-all product.
Stephen Dennis, Head of Robeco Australia and New Zealand, said the launch marked a significant step for the firm’s Australian business and for local institutional investors.
“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.”
“For our Australian business, this is a significant step in building out the range of strategies we can offer locally, and it reflects growing demand for more efficient, risk-aware core allocations.”
The day-to-day management of the strategy is led by Robeco’s quantitative portfolio management team, with human overview support from Hong Kong based Joshua Crabb – head of APAC fundamental, and on-the-ground support from Sydney based client portfolio manager Michael Lin.