Indus Valley: Three Key Alternative Industry Trends To Watch In 2018

Nov 30 2017 | 11:14pm ET

The search for alpha in the current market environment will push managers to continue to re-evaluate fund infrastructure and seek better ways to navigate and control firm-wide data, according to a new 2018 outlook report from alternative asset technology specialist Indus Valley Partners. 

With pressure growing from investors and regulators, many asset managers will also be seeking ways to unlock alpha through quantitative strategies, alternative data sets and machine learning, the company said. 

Indus Valley identified three key trends for 2018 in its report. Highlights:

  • Digitalization is driving operating model changes in both alternative and traditional asset managers. AI and machine learning will become mission critical in the search for alpha in order to better understand and engage with clients. Blockchain/DLT/Asset tokenization will be used in pilot programs to achieve post-trade operational efficiency and for better regulatory compliance. Simply hiring a Chief Data Officer (CDO) will not be enough; across pre-trade, trade and post-trade activities, asset managers need to rethink how they use fintech to deliver investment value and operational scale.
  • Alternative data sets will grow in popularity. Alternative and traditional asset managers, particularly quantitative traders such as hedge funds, will actively look to tap "dark" data in pursuit of obtaining an investing edge, as well as looking to social media-based sentiment analysis to confirm an investment thesis or find long/short trading opportunities. This trend requires expertise in big data, AI and machine learning.
  • Volume, velocity and variety of data will overwhelm asset managers unless they leverage an entirely new set of tools and techniques. Both alternative and traditional managers are facing pressure to innovate and reduce costs of their operating platforms with increased outsourcing. Managers will need the ability to control and navigate firm-wide data to increase innovation and manage operating risks, specifically with multi admin and multi counterparty outsourcing models.

Founded in 2000 and specializing in portfolio management technology for alternative asset managers, Indus Valley Partners has more than 130 global asset managers private equity funds among its client base. $1.5 trillion of global hedge fund AUM is managed using IVP technology.

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