Alternative Data Spend in U.S. to Double in Next Five Years, Says TABB Group Research

NEW YORK and LONDON, Nov. 10, 2016 -- The amount of unstructured, alternative data is increasing at a rapid pace, with technology and analysis capabilities also advancing to solve the data’s main constraint of deriving value from it. This perfect storm of technological sophistication brings us closer than ever before to charting out a real-time map of consumer behavior in both the real and digital world. TABB Group’s latest research, “Capturing Alternative Alpha: The Rise of Alternative Data Sets,” explores four different categories where alternative data is thriving, outlining the challenges and opportunities as well as breaking down the applications and implications for each.

Research author Valerie Bogard explains that the amount of alternative data has exploded, with alternative data market spend in the U.S. estimated to double in the next five years to $400 million. Within this growth, the categories of location tracking, satellite imagery, transaction data and public website data have been particularly useful. According to TABB, quantitative hedge funds have been at the forefront of creating alpha from this type of data, but increasingly fundamental hedge funds, sell-side firms, venture capitalists, and even long-only asset manager firms are looking into use cases for alternative data sets.

“While active managers are facing unprecedented competition from exchange traded funds, fund managers are also struggling to find alpha from their traditional data sources,” says Bogard. “Firms are gradually realizing that discovering new trading strategies also requires the discovery of new data and differentiated insights, which is driving a deeper hunger for alternative data as the answer.”

Bogard also details the important role of data partners, such as alternative data aggregators and synthesizers, for support in ushering in and managing these new sets of data. The research highlights 20 specific firms that are at the forefront of providing financial firms access and analysis to this data. As firms become more comfortable experimenting with the data and more knowledgeable about the methodologies of collecting and analyzing it, Bogard expects they will increase the overall momentum around adoption.

The research is now available for download by TABB equities and FinTech clients, as well as pre-qualified media at https://research.tabbgroup.com/search/grid. For more information or to purchase the report, contact [email protected].

About TABB Group

TABB Group is the international research and consulting firm focused exclusively on capital markets, founded on the interview-based research methodology developed by Larry Tabb. Since 2003, TABB Group has been helping business leaders gain a truer understanding of financial markets issues to develop actionable roadmaps and approaches to future growth. By accurately assessing their customer base, competition, and key market opportunities, TABB Group works with senior industry leaders to make critical decisions about their business. For more information, visit www.tabbgroup.com.

Contact:
Casey Sheets, TABB Group
+1 646-747-3207 / [email protected]