Glossary
Alternative data
Non-traditional data sources, such as satellite imagery or card transactions, used to generate an investing edge.
Also called: alt data
Alternative data refers to information used in investment research that falls outside traditional sources like company filings, analyst reports, and market prices. Examples include satellite imagery of parking lots or crop fields, aggregated credit card transaction data, web-scraped pricing and job postings, app usage statistics, shipping and customs records, and social media sentiment.
Funds process alternative data to estimate business metrics, such as a retailer's quarterly sales, ahead of official reporting, feeding it into quantitative trading models or as an input to factor investing strategies alongside traditional fundamentals. This differs from on-chain analytics, a related but distinct category limited to data recorded directly on public blockchains.
Alternative data matters because it can shorten the lag between an economic event and when it becomes visible in an investment thesis, similar in spirit to nowcasting at the macro level, and models built on it are typically validated through backtesting. The main pitfalls: many datasets are short-lived, so a provider's history may not span a full market cycle; coverage can be biased toward certain regions or demographics; and any edge tends to erode once a dataset becomes widely available, since its value depends partly on how few other investors are using it.
Last reviewed September 22, 2026