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Hedge fund demand to drive growth in alternative market data sector

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Rising demand from hedge funds is expected to propel the growth of the alternative data market in the coming years, according to a new report from Research & Markets, with the market expected to grow to $18.94 billion in 2027 at a CAGR of 41.4%. 

The global alternative data market grew from $3.23 billion in 2022 to $4.74 billion in 2023 at a compound annual growth rate (CAGR) of 46.7%. 

According to study in 2020, jointly published by AIMA and SS&C, which quizzed nearly 100 hedge fund managers globally, out of which approximately 25% of those surveyed are considered “market leaders” – hedge fund managers who have been using alternative data for more than five years – and over two-thirds (69%) of these market leaders are using alternative data to generate outperformance.

Moreover, in next one to five years, 61% of market leaders and 82% of the rest of the market expect alternative data to become increasingly popular among hedge funds. 

The launch of next-generation platforms has emerged as a key trend in the alternative data market. Major companies operating in the alternative data sector are focusing on introducing next-generation platforms to deliver new and timely insights to researchers, analysts, and businesses.

For instance, in October 2020, ESG Data Services Inc, a Canada-based alternative data provider launched the next generation AI-powered ESG data, research, and analytics platform-ESG Analytics. ESG Analytics is an API and web-based solution that uses artificial intelligence (AI) and broad-based alternative data sources to uncover opportunities and risks in social, environmental, and governance practices of companies, ETFs, and countries.
 

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