Enhanced Indexing Equities

One of the significant shifts in the past couple of decades has been the rise of passive solutions. Despite their undeniable merits, including low costs and transparency, they face challenges such as lagging behind benchmarks after accounting for costs, being prone to arbitrage, or facing limitations regarding sustainability integration.

Our Enhanced Indexing offering is a compelling option designed to capture the equity risk premium. It blends the benefits of passive (diversification, low fees, transparency) and active (incorporating decades of research insights in asset pricing) investing. As a result, it aims for consistent index-beating returns after costs by systematically attaining a balanced exposure to return factors – momentum, quality, value and short-term signals – while limiting deviations from the index.

Robeco’s Enhanced Indexing strategy is designed with the aim of systematically capturing the broad market return and benefit from factor premiums and innovative signals while integrating multiple sustainability dimensions. This disciplined approach has generated consistent, cost-efficient results since 2004.

Enhanced Indexing Equities leverage a time-tested systematic approach that obtains diversified exposure to an integrated multi-factor stock selection model. This ranks stocks based on the attractiveness of their valuations (value), the nature of their share price performance trends (momentum), the degree of their quality characteristics, e.g., balance sheet strength and profitability (quality), and the dynamics of short-term trends, e.g., share price reversals, and stock flows (short-term signals).

Using a low tracking error budget, a proprietary portfolio construction algorithm aims to efficiently balance risk, return, and sustainability considerations in the quest for stable excess returns. Client cash flows are also actively used in an effort to optimize portfolios by applying the latest stock rankings while aiming to avoid unnecessary portfolio turnover, reducing costs, and enhancing net returns.

The quant group consists of more than 50 quantitative researchers and portfolio managers, making it one of the largest quantitative teams in the world. We combine this breadth of quant disciplines with over 25 years’ experience of translating our quant research into innovative solutions.

Robeco’s Enhanced Indexing strategy is run by an experienced group of portfolio managers within an organization that is fully committed to quantitative investing. The portfolio managers collaborate strongly with and benefit from the expertise of Robeco’s researchers in managing the strategy.

These researchers are responsible for the development and enhancement of quantitative models and applications, which form the heart of our quantitative equity product line. The experienced research team has strong academic links.

Enhanced Indexing is offered in different geographic universes, including developed markets and emerging markets.