Eighty-two percent of hedge funds use alternative data in some capacity.
This is one of the key findings from Lowenstein Sandler’s survey of C-level executives, data scientists, equity analysts, portfolio managers, and legal/compliance officers regarding private funds’ use of alternative data.
Authored by Peter Greene, partner and Vice Chair of Lowenstein’s Investment Management Group, and with contributions from Benjamin Kozinn, a partner in that group, the survey reveals that fund managers increasingly seek a competitive edge in the market through the use of alternative data. The survey also found that funds’ use of this data to make better investment predictions has the potential to transform the industry. However, survey participants indicated that, while alternative data is mainly used to supplement fundamental industry analyses, it nevertheless raises significant concerns in terms of cost, quality, and reliability.