Nearly 70 percent of those classified as “market leaders” are using alternative data in their search for investment alpha (versus just 44 percent of the “late adopters”), according to data by the Alternative Investment Management Association and fund services provider SS&C. This suggests that, as hedge fund managers spend more time (and other resources, such as human and financial capital) on alternative data, cleansing it, structuring it and extracting valuable patterns, they progress toward employing data in their search for investment alpha.
There are two large opportunities that alternative data presents to managers. Firstly, alt data represents an additional, valuable tool for helping hedge fund managers deliver outperformance. Secondly, it can also be used to enhance various risk management processes.
Market leaders are defined as those managers that have been using alternative data for more than five years. About 92 percent of the market leaders are
