Data intended to get insights into the investment process is alternative data. Hedge fund managers and other institutional investing professionals inside a venture capital firm frequently use these data sets. Alternative data sets are statistics about an organization given by third-party sources and can provide specific and relevant information on investment prospects.
The most significant benefit of adopting alternative data is that it allows businesses to compare, assess, and develop alpha. Alternative data can help a company better understand its competitors and the market and enhance performance.
Investment firms strive to improve their alphas or profits. Data analytics is the chosen weapon when it comes to attaining competitiveness and pursuing alpha. Asset managers can extract useful information from various internal and external data sources by combining different data sets. Externally sourced alternative data is acquired about an organization and is frequently used to produce additional business knowledge. It is commonly associated with economic study. When paired with traditional data, credit card data and consumer sentiment, for example, can provide better estimates about a company's financial performance.
More than half of portfolio managers utilize it to keep their competitive edge by delivering better performance and supporting risk management procedures. More than 400 businesses provide alternative data to hedge funds, contributing significantly to market revenue. Thus, using alternative data to obtain a competitive advantage and generate greater returns on investments made by asset management businesses is expected to fuel the market growth during the forecast timeline.
5G networks will uplift the uptake of alternative data apps and services while allowing for software innovation. 5G's increased bandwidth allows more data to be transferred in less time, and its lower latencies enable data to reach its intended destination faster. These networks have more coverage and can handle a variety of network topologies, making it easier to send alternate data.
5G will increase data traffic as more smartphones and Internet-of-Things (IoT) devices become connected. As a result, the benefits of rising global adoption of 5G networks are expected to fuel market growth over the forecast timeline.
Companies are turning to their direct internet channels for immediate consumer feedback as the majority of the consumer packaged goods (CPG) market migrates to a direct-to-consumer (D2C) business model. Traditional customer analysis is becoming less important than data availability as consumers' behavior becomes less trustworthy. However, with global data collection expected to double by 2025, these attempts may initially sound be intimidating.
CPG companies should take an alternative data approach and start leveraging additional sources such as video analytics, search volume trends, social media, and e-commerce data to compete in this shifting context. Only a few companies have fully grasped the potential of linking internal operations data with data from third parties and other publicly available data sources. This could provide a considerable competitive advantage in the future and appealing expansion opportunities for businesses.
In the COVID economy, fundamental investment managers turned to alternative data, searching for unique indicators and streams of alpha. Behavioral shifts induced by the global pandemic have spurred both buy-side and sell-side firms to look at alternative data. When the COVID-19 pandemic broke out in March, some long/short hedge funds used non-traditional data to estimate the impact of shutoffs on businesses like restaurants, cruise lines, airlines, and hotels.
Quantitative asset managers have been mining alternative data sets for some time, but the proliferation of data and analytic tools has only just become popular. As everyone sought up-to-the-minute data, researchers and financial advisers used geolocation data to study retail sales and supply disruptions. On the other hand, the pandemic requires the gathering of new types of data.
The researchers examined data from a mobile mapping app, subway turnstiles, and airport security checks to see if activity reduced or rose during the outbreak and if an increase in cases would impede economies from recovering. As a result, the COVID-19 outbreak boosted demand for alternative data, resulting in positive market growth.
The post-pandemic period will be pivotal for the global alternative data management market. Due to a lack of understanding about the benefits of alternative data and skilled individuals working with modern technology, the market's growth is anticipated to be limited. Factors such as increased demand for alternative data from investment management firms and increased use of the 5G network as a result of favorable government efforts, on the other hand, are anticipated to enhance market growth over the forecast timeframe.
North America, Europe, Asia-Pacific, South America, and the Middle East and Africa make up the market's five regions. North America and Europe are the two most important markets for alternative data management. The most important alternative data management market is expected to be in North America. UBS Evidence Lab, M Science, Eagle Alpha, and Advan are among the industry participants attributed to the region's large market share.
Europe is expected to be the second-largest alternative data management market, with an expected market value of USD 47,640 million by 2030, owing to the handling of numerous alternative investments; natural resources, real estate, hedge funds, and private equity are among the assets classes in which these assets are concentrated. Asset management businesses increasingly use alternative data to generate profitable alpha-generating approaches.
Since investors are increasingly using data-driven analysis, the Asia-Pacific region is likely to occur as one of the fastest-growing regional markets. Companies from growing economies such as Thailand, Singapore, India, and China are expected to benefit significantly from the regional market.
Business digitization in South America and the Middle East and Africa, has far-reaching implications for regional economies, education, and employment. Saudi Arabia, for example, prioritizes digital transformation in its 2030 Strategy and National Transformation Program (NTP) 2020 to create private-sector jobs and encourage partnerships. Such a rapidly growing economy will almost certainly present unrivaled market potential during the foreseeable term.
1010Data, Advan, Dataminr, Earnest Research, M Science, Preqin, RavenPack, Thinknum Alternative Data, UBS Evidence Lab, Convergence Inc., Geotab Inc., and YipitData