How Exabel CEO Tim Harrington Sees AI and Alternative Data Reshaping Hedge Fund Research

Hedge funds are always looking for the next big thing to give them an edge over the markets — and competitors. Alternative data is one way many fund managers are trying to gain that edge, as evidenced by the increase in spending in this area by managers.

In an interview with Hedge Fund Alpha, Exabel CEO Tim Harrington explained how they partner with data providers and shared some of the most interesting new types of data managers are trying to tap to get their edge.

Spending on alternative data by hedge funds on the rise

A survey conducted by Exabel shows that 94% of firms expect to spend more on alternative data this year, with almost one-fifth expecting to boost spending significantly. Almost 60% say senior management teams are very committed to using alternative data.

More than half of firms report that their budgets for buying and managing alternative data have risen at least 50% in the last couple of years. One in 20 of the professional investor groups say their budgets have more than doubled, and all firms report that spending has increased.

“I think that that has been driven by the AI and LLM uptake, and so that’s been positive,” Harrington said. “… We are seeing a lot of new data that’s been created in different places coming to market. And in some cases, that could be exhaustive data from different companies that are interested in selling it to just new products that some of the larger data providers have found macro use cases for. Obviously, the markets are up a lot last year, so the rising tide helps all boats. But in this case, alternative data seems to have kind of doubled what the traditional growth rates would be.”