Hedge funds to help drive growth in global alternative data market to USD69.36bn by 2028
The global alternative data market size is expected to reach USD69.36 billion by 2028, expanding at a CAGR of 58.5 per cent from 2021 to 2028. The increasing emphasis on gaining alpha from hedge funds is expected to boost the demand for alternative data.
That's according to a new report from Research & Markets which says that: "asset managers from hedge funds, mutual funds, private equity funds, pension funds, unit trusts, life insurance companies, and other BFSI entities are highly inclining to use alternative data to derive predictive insights". Moreover, the use of alternative data for risk management processes is expected to drive the market.
Nowadays, data sources are not limited to transactions and email receipts as companies are finding ways to extract data from various emerging sources. These include social media, web traffic, mobile devices, sensors, IoT-based devices, satellites, and e-commerce portals. The data analysts utilise this data in correlation with each other to derive various hidden patterns and insights. However, the data collected from some of these sources conflict with privacy regulations such as the California Consumer Privacy Act (CCPA) and the General Data Protection Regulation (GDPR). Thus, the data aggregators and end-users need regulatory compliance, which ensures their datasets are free from Personal Identifiable Information (PII).
North America dominated the market in 2020 with a share of more than 68.0 per cent and is estimated to continue dominating the market from 2021 to 2028. The emerging presence of numerous alternative data providers in the US is the major driving factor. Companies such as Advan, Eagle Alpha, M Science, and YipitData are providing various types of alternative data, including credit and debit card transactions, email receipts, geo-location (foot traffic) records, mobile usage, satellite, weather data, social and sentiment data, and web scraped data. The acquisitions and partnership initiatives from companies, such as Nasdaq and S&P Global Platts, are further expected to fuel the regional market growth. Asia Pacific is expected to emerge as one of the fastest-growing regional markets over the forecast period. This is due to the rising use cases of alternative data in the BFSI, retail, automotive, and telecommunication industries. The use of alternative data for investments and risk assessment, particularly from companies in emerging economies, such as India and China, is expected to boost the regional market growth.