Alternative Data Poised for a Surge in Growth, According to Lowenstein Sandler Report
Lowenstein Sandler’s Investment Management Group has released its 2024 Alternative Data Report, titled “Alternative Data Poised for More Growth in the Age of AI.” The report, authored by Scott H. Moss, Boris Liberman, and George Danenhauer, examines the increasing use of alternative data by investment professionals.
Over the past six years, investment managers have progressively integrated alternative data to refine decision-making processes, optimize portfolios, enhance due diligence efforts, and boost returns. Now, with the widespread availability of AI tools, they are poised to analyze substantially more data to unearth valuable insights.
“Alternative data is no longer novel, but the combination with AI creates the possibility for original insights at a scale and speed that was previously unattainable,” says Moss.
Key Findings of the Report
Lowenstein Sandler has been surveying investment advisors for hedge funds, private equity firms, and venture capital funds to track their use of alternative data since 2019. The firm’s newest report offers insight into the evolving landscape of alternative data adoption within the investment management industry. This dynamic sector, valued at over $9 billion globally, relies on varied forms of information not found in conventional sources like company filings or analyst reports—examples include credit card transactions, geolocation data, and mobile device data. Below are some of the key report findings:
- Increased Adoption: 67% of respondents are currently using alternative data, a five-percentage point increase from 2023 and more than double the 31% recorded in 2022.
- Budget Increases: 94% of current alternative data users intend to increase their budgets allocated to it.
- AI Integration: 61% are using AI to aid in investments and trading.
- Projected AI Usage: 85% of respondents using AI for investment research, portfolio management, or trading anticipate increasing their use in the coming year.
AI and the Future of Investment
The report highlights the rapid integration of AI, including in investment and trading strategies, emphasizing the need for robust policies and procedures. These policies must be designed specifically for the firm’s AI applications and provide for legal and compliance oversight, especially where AI is used in investment decision-making.
Lowenstein Sandler LLP is a prominent advisor on legal and compliance issues related to alternative data and AI implementation. The firm conducted similar surveys in 2019, 2021, 2022, and 2023.
[Access the full report here](link to report).
About Lowenstein Sandler LLP
Lowenstein Sandler LLP is a national law firm with over 350 lawyers based in New York, Palo Alto, New Jersey, Utah, and Washington, D.C. The firm represents leaders across various sectors, with a focus on investment funds, life sciences, and technology. The firm is known for its entrepreneurial approach and commitment to client service and the communities it serves.
