Data gathered from autonomous vehicles will change investing – and much else besides
Eighty percent of institutional investors are looking for greater access to alternative data sources to help gain an edge in generating alpha, according to Greenwich Associates, which surveyed 69 CIOs, traders and portfolio managers from European- and US-based investment firms managing between $100m and $1tn in assets. Alternative data sources include crowd-sourced research and analysis of social media sentiment, as well as logistics data, credit scores, private company data and payment histories. These data sources are not yet fully developed, but are being integrated into conventional trading data.
Tuesday, January 31, 2017 Stamford, CT USA — Institutional investors are on the hunt for alternative data that can help boost investment returns and give them an advantage over rivals. Eighty percent of the institutional investors participating in a recent study by Greenwich Associates want greater access to alternative data sources to help generate investment “alpha.”

Between October and November 2016, Greenwich Associates interviewed 69 U.S.- and European-based chief investment officers, portfolio managers and traders at investment management firms with between $100 million and $1 trillion assets under management. These investors have information at their fingertips that would have been unimaginable just a decade ago. However, the sheer ubiquity of much of the data used in the investment process makes finding alpha others have yet to unearth increasingly difficult.

As a result, institutional investors are broadening their search and integrating a growing set of new and diverse alternative data sources into their investment processes. These sources often include crowd-sourced research and social media sentiment analysis, but also increasingly include things like satellite images of parking lots, logistics data, alternative public company data such as credit scores, payment history, and private company data that are seen by investors as providing a huge edge in today’s market.

Alternative Data Won’t Be “Alternative” For Long

Despite the radical shift of information availability, the use of alternative data remains in its infancy. Investors say these data sources are incomplete, lack quality controls and can be difficult to integrate into their internal investment analysis processes.

“Alternative data will only be alternative for so long,” says Kevin McPartland, Head of Research in Greenwich Associates Market Structure and Technology Practice, and author of a new report entitled, Alternative Data for Alpha. “These data sources and providers will quickly become part of portfolio managers’ standard toolkits once the existing roadblocks are taken down.”