Investment managers’ use of alternative data to ‘soar’ over next two years

Investment managers are set to increase their use of alternative data over the next two years, as they seek new ideas to generate alpha, according to research from Exabel.

The alternative data insights and analytics platform found that 98 per cent of fund managers and investment analysts working for fund managers believed the use of alternative data will increase over the next two years.

This included almost one in five (19 per cent) investment managers who forecast a dramatic rise in its use.

Exabel’s Alternative Data Buy-side Insights & Trends 2026 report also found a growing consensus on the importance of alternative data for investment firms looking for new ideas to generate alpha.

Almost three quarters (73 per cent) agreed strongly with this view, while 27 per cent slightly agreed.

Employment data and app and web data were identified as the most likely to provide an outsized ‘informational edge’, as alternative data becomes more standardised in investment research.

Over half (57 per cent) cited employment data, while 46 per cent pointed to app and web data, as likely to provide an edge.

Meanwhile, 44 per cent highlighted social sentiment data and 40 per cent cited energy and materials data.

When asked when they started using alternative data, 11 per cent first used it more than five years ago, 72 per cent started between one and five years ago, and 17 per cent began in the past 12 months.

Nearly three quarters (74 per cent) use between two and four alternative datasets, while 23 per cent use between five and 10, and 3 per cent use more than 10.

“Alternative data has moved firmly into the investment mainstream with usage expected to expand further over the next two years,” commented BattleFin & Exabel CEO, Tim Harrington.

“Particularly strong growth is expected in logistics and shipping, app and web activity and social sentiment data with employment data, app and web data and social sentiment seen as the categories most likely to deliver informational advantages.”

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