Exabel – the Norwegian alternative data platform for investors – recently announced the results of a report that surveyed 130 fundamental portfolio managers and analysts, with a total of ~$820bn AUM. The report confirmed what many of us already know:  alternative data is now mainstream. Adoption of this new resource is accelerating, and those who hesitate risk being left behind.

The full report is available here, but I have summarised the key findings:

• 100% of respondents use alternative data in their investment process.
• 98% agree that traditional data is too slow when it comes to reflecting economic changes.
• 75% see consumer spending data as providing an outsized information edge.
• 85% expect to rely more on third-party tools for alternative data integration.

t is clear that most global managers have already incorporated alternative data sources into their strategy – a clear signal that the alpha this creates justifies the investment. In contrast, the adoption of alternative data here in South Africa is still in its early stages. That said, most global investors have only been using the resource for 3–5 years, which presents a great opportunity to local managers, who can learn from established use cases and best practices and thereby accelerate their own return on investment. The key is to catch up with their international peers now, during this key phase of local indecision.

Against this local backdrop, I find the last point from the Exabel summary most intriguing: 85% of respondents are already expecting to increase their use of third-party tools to analyse alternative data. Use of third parties is so high because navigating multiple datasets is the biggest challenge.  If larger, global managers that are further along the adoption curve struggle with integrating multiple datasets, perhaps the best path for local managers to ramp up the adoption curve is to start their journey partnering with third-party providers. 

The important thing here is not having access to alternative data – that’s important, obviously –but the real value to the investment process comes from having the expertise to aggregate, compare, supplement and analyse that data. 

In short, many investment firms are increasingly turning to expert third-party companies to derive value from alternative datasets, giving them a competitive edge in the market. The window to gain this edge is still open – especially in South Africa – but it’s closing fast. Investors who partner with third-party data experts will reap the rewards while the rest play catch-up.