According to the new research report on "Alternative Data Market Forecast to 2030 – Market Size and Forecasts (2020 - 2030), Global and Regional Share, Trends, and Growth Opportunity Analysis," published by The Insight Partners, the market is expected to reach US$ 156,230.65 million by 2030 and register a CAGR of 51.8% from 2022 to 2030.
Hedge funds help to protect investors from market volatility and downturns better than other investment benchmarks, leading to the rising investment in hedge funds. According to Empaxis’s blog in April 2023, rise in inflations, crisis in cryptocurrency, and uncertain markets are a few major factors contributing to the growth of hedge funds. Alternative data for hedge funds, from satellite imagery to social media activity, is gaining popularity among the fund managers and financial institutions to stay competitive by generating outperformance and supporting the risk management processes and its adoption helps to fuel alternative data market growth.
The benefits of alternative data over traditional data sources to offer unique insights and accurate information regarding hedge funds investment are driving the use of alternative data to gain a competitive edge and improve investment performance which fuels the alternative data market size. Alternative data provides additional insights into potential investment risks, helping hedge funds make better-informed decisions and manage risk exposure more effectively. Early indicators derived from alternative data help hedge funds with valuable insights related to shifts in market sentiment, company performance, or industry dynamics, enabling them to act on this information ahead of other market participants. Therefore, the rising demand for alternative data from hedge funds is contributing to the alternative data market growth.
In the US, there is a rise in hedge funds as it supports investors during market volatility and downturns. According to Empaxis, ~1.4% of US-based assets under management (AUM) managed by diverse-owned firms in 2021 grew by 0.4% compared to 2016. The AUM is majorly managed by minority-owned firms and women. Per the study by BNP Paribas, investors are majorly investing in women and minority-led funds; as a result, the hedge funds are increasing in the country. Therefore, the growing demand for hedge funds by hedge fund managers and other institutional investment professionals in an investment company contributes to the US alternative data market share.
The UK recorded a rise in hedge funds due to investors' growing inclination towards netting huge profits. For instance, in September 2022, Crispin Odey, a hedge fund manager, claimed that the firm's hedge fund reached 145% in 2022 compared to the last 10 years. Therefore, the rise in hedge funds is contributing to the demand for alternative data to understand the market and make efficient investment decisions, further fueling the UK alternative data market share.
Key Findings of Study:
Based on data type, the alternative data market is segmented into credit and debit card transactions, email receipts, mobile application usage, satellite and weather data, social and sentiment data, and others. The credit and debit card transactions segment held the largest alternative data market share in 2022. Credit and debit card transaction data is one of the most reliable data types. This is the data regarding consumers’ usage of credit and debit cards or their deposit/current accounts. Credit and debit card transaction data includes information such as rent payment history, gig-economy income, utility bill payments, and childcare payments. Credit and debit card transaction data is useful in tracking retail revenue and estimating the average purchase value of a company’s client. This data also increases loan approval rates. Thus, increasing usage of digital payments and online shopping contributes to the segment’s growth in the alternative data market.
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