A survey conducted by data and analytics advisory firm Element 22 revealed that alternative data and advanced analytics have now become mainstream for asset managers seeking greater returns on investments.
John D’Antona Jr. filed this report on the Element 22 survey for Bloomberg:
In terms of the application of alternative data and advanced analytics by asset management firms, the study found:
- Advanced analytics has seen high adoption, with 85% of firms using this capability at some level while 55% are using alternative data.
- 50% of those surveyed are using alternative data for the purposes of alpha generation, while 30% are using such data for client acquisition and retention purposes.
- 95% of asset managers are using or developing advanced analytics to generate alpha, compared to 75% for business operations and 70% for client acquisition and retention.
- ML stood out as the most mature type of advanced analytics solution, with 90% of asset managers deploying it in some way.
Overall, there was no correlation between the size and type of asset manager and their use of advanced analytics and alternative data. Regardless, a successful advanced analytics and alternative data program requires investment in talent. Some firms currently employ as many as 500 people in data and analytics teams and as many as 200 data scientists.
