This content is from: Innovation

eBook: Alt Data Democratization

The Role of Evolving Tech & Soft Dollars in Broadening Adoption

The use of alternative data can be a differentiator for an investment firm, but the effort it takes to accumulate and analyze the data can be lengthy and expensive. As a result, alt data has historically been used primarily by firms with very deep pockets, supplying them with a secret weapon of sorts. The playing field is leveling a bit, however, in part due to evolving technology, but there is also an evolution taking place in leveraging soft-dollar broker relationships to secure alt data that otherwise would, from a budgetary perspective, be out of reach.

Demand for alt data is not waning. A recent survey by Greenwich Associates of 40 decision makers at institutional asset managers, hedge funds, and proprietary trading firms indicates that, on average these firms are spending about $900,000 yearly on alternative data. At an industry level, about $300 million annually is invested in alt data, and that figure is trending upward. Given that hedge fund managers were among the earliest adopters of advanced algorithms, the enthusiasm for data that’s globally sourced, non-traditionally gathered and granular in detail is not unexpected.

Investment strategies that incorporate alternative data are viewed as a must by asset managers looking for a competitive edge, and while the process for gathering data and the ability to access it is becoming increasingly more efficient, questions remain regarding how to pay for it.

Read the full eBook.

Related Content