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Active managers look to third party support for alt data analysis

When it comes to analysing alternative data, 71% of professional investment managers and analysts who focus on fundamental investing say they use third party software systems, according to new research from alt-data specialist Exabel.

When it comes to analysing alternative data, 71% of professional investment managers and analysts who focus on fundamental investing say they use third party software systems, according to new research from alt-data specialist Exabel.

The company’s research found half (49%) of professional investors interviewed say they use systems provided by data vendors, while 45% use in-house software systems. One in three (33%) meanwhile, say they use basic tools such as Excel and Tableau.

Some 91% expect to increase their use of third-party software systems to analyse alternative data between now and 2028, with 21% expecting a dramatic increase.

In terms of why they expect usage to increase, 69% of professional investors interviewed said it is because it is more economical to do so than invest in their own in-house systems, followed by 51% who said they provide a more consistent way to work with different types and sources of data. 

Just over half (55%) of professional investors surveyed said their organisations are using between five and 10 alternative data sets, while 38% say they are using between two and five.

The study found that many investors are very reliant on third party vendors for their alternative data, with just over half (51%) saying they source between 50% and 75% of their alternative data this way, and one in ten (10%) saying they receive between 75% and 100% from third party vendors. Over the next three years 77% of professional investors say they will become more reliant on third parties for supplying alternative data.

Overall, 89% of professional investors surveyed said the quality of alternative data provided by data vendors is excellent or good. 

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