Privacy risks dash funds’ alternative data dreams

Asset managers see value in alternative data in its rawer forms, but most won’t touch it

Alternative data could be a rich source of alpha, both for quant firms and fundamental investors. Most asset managers, though, are handling it more like high-grade explosives.

So, what’s holding them back? When asked, most cite the risk of privacy violations.

“Everybody is petrified of bad publicity around this,” says Abraham Thomas, co-founder of Quandl, a data marketplace recently bought by Nasdaq. “Hedge funds don’t want to take personal identifying information onto their servers at all.”

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