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Alternative Market Briefing

82% of surveyed hedge funds use alternative data, but not without concerns

Wednesday, September 11, 2019

Laxman Pai, Opalesque Asia:

Over 80% of surveyed hedge funds are using alternative data for detailed industry analyses, though data cost and quality issues remain, said a study.

According to Lowenstein Sandler's hedge fund industry survey, 82% of hedge funds are already using alternative data in some capacity, and 75% of respondents are using it to make better investment predictions.

The first survey of its kind from the firm's Investment Management Group revealed that with more funds using alternative data, the results evidence an increasing interest in using newer data sources such as web scraping and biometrics to stay competitive.

But, factors such as new regulations and privacy laws, cost and time investment, and the ability to distinguish relevant information from large volumes of data could stymie those plans for growth, said the report authored by Peter D. Greene, partner and Vice-Chair of Lowenstein's Investment Management Group, with contributions from Benjamin Kozinn, a partner in that group.

"It is not surprising to me that an overwhelming majority of funds are using alternative data," said Greene. "What is interesting is how funds of various sizes are using it and how they plan to expand their use in the future. In a changing industry, it is more important than ever to learn what alternative data can do, while also acknowledging the limitations and concerns that come with using such data."

98 % of respondents who use alternative ......................

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