Investment managers facing alternative data challenges, Exabel report says
14 March 2023 Norway
Image: Freedomz/stock.adobe.com
Only 63 per cent of portfolio managers and investment analysts rate their organisation’s use of alternative data as ‘good’, a recent study from fintech Exabel has found.
Of those surveyed, all of whom focus on fundamental investing, 23 per cent report excellent use of alternative data and 12 per cent categorise it as ‘average’.
The report defines alternative data as “non-traditional data that can provide an indication of future performance of a company outside of traditional sources such as company filings, broker forecasts and management guidance.”
28 per cent of participants believe that the funds they manage do a ‘very good’ job of integrating alternative data into their operations, with 61 per cent rating their funds as doing this ‘quite well’ and 10 per cent reporting ‘average’ success.
Extracting benefits from alternative data is difficult primarily due to the quantity of data available and problems around prioritising it, the report states. 53 per cent cited this as their most significant barrier, followed by data quality (21 per cent), integration issues (15 per cent) and unusable data formats (7 per cent).
Commenting on the findings, Neil Chapman, CEO of Exabel, says: “Active investment managers are relying on alternative data more to support their investment research and strategies.
“However, our findings also reveal there are challenges that they face in terms of how they use this data and extracting benefits from it. Critically, with advances in domain specific technology, the insight that fund managers can derive from alternative data is increasing rapidly.”
Of those surveyed, all of whom focus on fundamental investing, 23 per cent report excellent use of alternative data and 12 per cent categorise it as ‘average’.
The report defines alternative data as “non-traditional data that can provide an indication of future performance of a company outside of traditional sources such as company filings, broker forecasts and management guidance.”
28 per cent of participants believe that the funds they manage do a ‘very good’ job of integrating alternative data into their operations, with 61 per cent rating their funds as doing this ‘quite well’ and 10 per cent reporting ‘average’ success.
Extracting benefits from alternative data is difficult primarily due to the quantity of data available and problems around prioritising it, the report states. 53 per cent cited this as their most significant barrier, followed by data quality (21 per cent), integration issues (15 per cent) and unusable data formats (7 per cent).
Commenting on the findings, Neil Chapman, CEO of Exabel, says: “Active investment managers are relying on alternative data more to support their investment research and strategies.
“However, our findings also reveal there are challenges that they face in terms of how they use this data and extracting benefits from it. Critically, with advances in domain specific technology, the insight that fund managers can derive from alternative data is increasing rapidly.”
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