Eagle Alpha has been fielding inquiries from clients for many years on alternative datasets that either originate in China or can address investment use cases in China. In general, the queries are broad macro use cases to track the Chinese economy or datasets that can be used to monitor consumer spending trends. Within consumer spending the majority of investors have looked for information on western brands that have a large exposure to the region or have China as a significant part of their quarterly revenue growth. We have pulled together content across data strategy related to these themes but also address other datasets that investors are interested in. Any discussion on alt data involves complex legal issues and when it comes to China the issues can be particularly tricky. We will highlight relevant content on the subject.
Background Consumer transaction data is one of the most popular and widely deployed types of alternative data by investment managers. The data is also used extensively by corporates with exposure to the retail segment of the economy. Quants and discretionary managers...
The US election is rapidly approaching, and investors are trying to position themselves by using alternative data. Some people argue that it is futile to try and position your portfolio based on the potential outcome of an election. The chart below shows that the buy and hold market index has worked historically. In recent years only the Bush administration saw negative returns, which was driven by the financial crises. However, within the Bush term, Oil companies and Defence stocks outperformed the averages. Similarly, during the Obama years, consumer discretionary stocks returned 338% while energy stocks returned just 53%. Sectors and stocks matter and alt data can help formulate a view of election outcomes.
ESG has been possibly the most consistent topic of interest to our clients over the last 18 – 24 months. That’s reflected in the AUM numbers with global ESG AUM estimated at $30 trillion according to GSI Alliance. The US alone accounts for $12 trillion of this and the AUM in the region doubled from 2014 to 2018 to $12bn. GSI research also indicates that the fastest growing strategies are ESG integration and negative/exclusionary screening, both of which can be greatly enhanced by incorporating alternative datasets.
Multiple surveys and our own experience at Eagle Alpha highlights web crawled data as one of the most popular categories of alternative data. There are multiple reasons for this, including breadth of applications, ease of access and low price points. In this article, I will touch on what I consider to be the most important aspects of this important alternative data category.
The significant increase in spending has attracted new entrants to the alternative data space. Data exchanges have been launched by traditional Wall Street data firms (e.g. Open: Factset and S&P Global), stock exchanges (IEX and Nasdaq/Quandl) and more recently cloud companies (AWS Data Exchange and Snowflake). My sense is that other firms (e.g. Wall Street data firms, stock exchanges, cloud providers, investment banks) are at risk of falling behind if they do not launch data exchanges soon.