Alternative data continues to strongly influence the decision-making of investment professionals across all areas of the investment management industry.
In a testament to the rising importance of alternative data, the multi-billion dollar financial, software, data, and media company Bloomberg L.P. this year announced an alternative data function for its terminal users, which allows them to incorporate consumer transactions and location analytics into their investment strategies. In its announcement, Bloomberg said it was “democratizing access to alternative data.”
However, while the number of investors using this resource continues to grow, a recent survey by law firm Lowenstein Sandler LLP has found that, in 2023, budgets devoted to acquiring and using alternative data are not growing with the same momentum as they have in previous years.
Lowenstein Sandler has surveyed investment advisers for hedge funds, private equity funds, and venture capital funds for four years in an initiative aimed at understanding the role played by alternative data.
Alternative data, which boasts a market estimated at $4.7 billion, includes forms of information not contained in company filings, press releases, analyst reports, or other traditional sources, such as credit card transaction and mobile device data.
This year’s survey reaffirms that alternative data has become deeply ingrained in the investment landscape. In 2023, twice as many survey respondents as last year indicated they are currently using alternative data. Once regarded as a novel way to generate alpha, alternative data is now increasingly considered mainstream, an unsurprising development given the highly competitive market for attractive returns.
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