“What differentiates investment strategies is data”

As a follow-up to the Hedge Funds Club Dialogue luncheon peer discussion on alternative data that was held a few months ago in Tokyo, the Hedge Funds Club’s Stefan Nilsson had a chat with Takeshi Akino, COO of alternative data provider aiQ.

What kind of alternative data do you currently see demand for?

According to a Neudata survey published in February, transactional data remains the top as it has been for a long time, apart from web-scraped data, which is cross-categorical in nature. aiQ provides POS consumer goods and POS electrical goods, which are categorised as transactional too.

How do you source your alternative data?

We partner with data owners who own big data for purposes other than asset management. The big data often requires a fair share of transformation, such as data cleansing, tickerisation, etc., before it is suitable for creating insights and signals for asset managers. We prepare the data pipelines and run backtesting on the output before we move ahead with a partnership agreement with each potential partner. We do this for each dataset. It is time-consuming. This is why it is better for data users to speak to alternative data providers instead of directly communicating with raw data holders.

With the alternative data industry evolving fast and new providers popping up, what differentiates aiQ’s offering in a crowded market?

Alternative data users often prioritise datasets with promising use cases, because often working with alternative datasets takes a lot of time, especially when you have to work from scratch without prior studies. We provide use cases of the datasets that we work with, whereas many other alternative data providers are not equipped to show clients KPI analyses and backtesting. Although the use cases are mostly oriented toward quant users at the moment, we are working toward creating a service to support non-quant users.

What role does artificial intelligence play in alternative data and data analysis?

This is already crucial for alternative data analysis. It will boost the amount of information one can process, which is desirable with or without alternative data. For instance, there are so many new news articles made available every day. It is impossible for investors to follow everything. Ideally, we only want to know about the important news by filtering out what is not. aiQ provides a new GenAI service called Analystant where our proprietary fine-tuned GenAI model works as a personal AM analyst and assists you in finding which information is relevant by generating automated analyst reports per ticker.

What plans do you have for expanding the scope of the alternative data you offer?

We are planning to expand our transactional data coverage. We are excited to provide visibility to some of the large-cap companies like Fast Retailing on a daily basis. We are also in discussions with other partners to start providing insights on new hirings and resignations per listed company.

With hedge funds constantly looking for an edge, how big of a role do you think alternative data will play in investment decisions in the coming years?

There is no doubt for us that alternative data will be more and more crucial to investors in the coming years. We believe what differentiates investment strategies is data they rely on for understanding economic activities of companies and economies. As new tools like GenAI-based services become available for interpreting multiple datasets and getting unified insights at a reasonable cost, we believe alternative datasets will more and more become inseparable from investment decisions.