The growing demand for alternative data is exposing the problems that investors and asset managers face when trying to use the data to inform their investment decisions.
This is the main finding from recently published research.
The research report, produced by data management software provider Exabel, found that almost all of respondents (96%) are already using alternative data to support their strategies while a similar number (91%) expect usage to increase between now and 2025.
However, more than half of investors (53%) struggle to process raw alternative data into a usable format for their fundamental equities research.
And almost three-quarters (71%) find combining data from different sources, their greatest challenge when using alternative data.
Respondents were also asked to identify the biggest barriers to extracting value from alternative data. More than half (53%) said that there is too much data while 21% highlighted a lack of quality.
The report also found some divergence in the datasets deemed the most useful by institutional investors with 76% citing consumer spending over employment data and social sentiment data.
The survey canvassed 100 discretionary portfolio managers and analysts.
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