Hedge funds and other active Investment managers plan to further increase their use of alternative data for research and insights with geolocation and consumer spending data expected to see the biggest growth in demand, new research from alternative data platform Exabel and BattleFin shows.
The global study with hedge funds and other active investment managers and analysts working for fund management firms with total assets under management of USD820 billion, found 86 per cent expect to increase their use of alternative datasets over the next two years. All categories of data will see growing demand with 51 per cent expecting dramatic increases in usage for geolocation data over the next three years and 50 per cent dramatic increases in use of consumer spending data.
Exabel’s research report ‘Alternative Data Buy-side Insights & Trends 2025’found all the managers and analysts questioned in the US, UK, Singapore and Hong Kong currently use alternative data in some form. Almost all (98 per cent) agree that traditional data and official figures are becoming too slow in reflecting changes in economic activity.
Consumer spending datasets are seen as the most likely to provide an outsized informational edge in the near future, the study found. Around 75 per cent questioned chose consumer spending data compared with 50 per cent choosing Natural Language Processing (NLP) and sentiment while 45 per cent selected social listening and 43 per cent chose employment and people moves data. Just 7 per cent selected satellite data.
The study found investment managers and analysts have built up experience using alternative data with 61 per cent questioned saying they began using it three to five years ago, while nearly one in ten (9 per cent) did so more than five years ago. Around 28 per cent started using it a year to three years ago. Their experience of using it has been generally positive with 87 per cent saying the process of using alternative data is good or excellent.
Andreas Aglen, President of Exabel says: “Institutional investors have embraced alternative data as a key source of differentiated insight and the demand for alternative data as a crucial component of alpha generation for institutional investors continues to accelerate.
“It is even more clear now that alternative data has gone mainstream, serving as a vital source of insights to investment managers around the world.”
