New report “Putting Alternative Data to Use in Financial Services” from Arcadia Data and Greenwich Associates reveals active use of alternative data to drive investment decisions and reduce risks
September 12, 2017, San Jose, CA — Arcadia Data, provider of the first native visual analytics software for big data commissioned Greenwich Associates to analyze how alternative data is used by hedge funds and asset managers across the U.S. and Europe to create alpha and reduce risk.
The findings revealed that alternative data, which encompasses any data set that is not commonly thought of as financial in nature, improves returns by identifying anomalies that could flag opportunities or risks, but also by making it easier for fund managers to articulate financial strategies to their clients, ultimately increasing the total assets they manage. This research was commissioned by Arcadia Data as part of the Taurus Initiative to help the financial services industry mitigate risk and get faster time-to-value from large volumes and many types of data, some of which are considered new or alternative to the industry.
Greenwich Associates surveyed hedge fund and asset managers across the US and Europe and uncovered the following key findings:
- 90% of alternative data users have seen the return they hoped for, with hedge funds slightly more positive than asset managers.
- 95% of respondents say that alternative data helps to explain strategy to their clients, ultimately increasing the total assets they manage as well.
- Two-thirds of buy-side firms using alternative data–which includes nearly 80% of hedge funds–take a team-based approach using data visualization as their primary tool;
- 55% of asset managers seek out data to support a strategy while two-thirds of hedge funds utilize alternative data to unearth new investment ideas;
- Over 60% of asset managers and nearly 3/4ths of hedge funds are currently using social media and social-driven news feeds as part of their investment process but the Internet of Things (IoT) and satellite imagery are the biggest items on their wishlist
“The value in alternative data comes from how it is put to use, not from a novel data source by and of itself,” said Paul Lashmet, practice lead and advisor for financial services at Arcadia Data. “The survey findings echo this fit-for-purpose view by showing that, even within a single buy-side community, hedge funds approach alternative data differently than asset managers. Portfolio managers, chief investment officers, or fund managers, either independently or collaboratively, drive the process, whether they are searching for brand new opportunities or feeding algos that trade on pre defined signals.”
“The asset managers and hedge funds we spoke with feel they are deriving a significant advantage from the use of alternative data,” says Kevin McPartland, Head of Market Structure and Technology Research at Greenwich Associates. “But investors hoping to replicate that advantage better move fast, because the term ‘alternative’ is fleeting. Today’s alternative data will only be alternative for so long.”
To learn more about how to navigate the alternative data landscape, join the Arcadia Data, Cloudera, and Greenwich Associates webinar on September 13th as they describe the practical mechanizations of identifying, obtaining, and applying alternative data.
To learn more about how hedge funds and asset managers apply alternative data, join Arcadia Data and Greenwich Associates as they deliver a webinar from a business perspective on Wednesday, October 11.
To receive a complementary copy of the report and for more information on the webinars, visit: https://www.arcadiadata.com/alternative-data
About Arcadia Data
Arcadia Data provides the first native visual analytics software that runs within modern data platforms for the scale, flexibility, performance and security users need to glean meaningful and real-time business insights and design data-centric applications in the era of big data and IoT. Arcadia Enterprise is purpose-built to analyze large volumes of data without moving it, filling the gap between self-service BI and advanced analytics for use cases like cyber security, connected devices, and customer intelligence. The Arcadia Data platform is deployed by some of the world’s leading brands, including Procter & Gamble, HPE, Royal Bank of Canada, Kaiser Permanente and Neustar. To learn more, visit Arcadia at www.arcadiadata.com. Follow Arcadia Data at @ArcadiaData.