Compatibility in the Cloud
The traditional, offline approach to capital introduction has met its match
Two-sided matching has revolutionized existing industries in ways that are now taken for granted. Think back 20 years to how individuals bought books, rented videos, traded stocks, or found true love. Thanks to matching algorithms and other innovations, companies like Amazon, Netflix, E*Trade, and Match.com have been able to satisfy consumer needs faster and more effectively, forever altering the competitive landscape within their respective industries. Two-sided matching has also wrought dramatic transformations within publishing, travel, and online search.
AltX applies a similar strategy in the hedge fund space, connecting compatible investors and hedge funds by leveraging data science, advanced computation, and proprietary algorithms. Profile and preference data are incorporated with background information sourced from multiple data providers — from SEC filings to court documents to news articles — into a single platform. AltX’s algorithms then go to work, generating custom recommendations via three key factors: conventional investment analytics, behavioral assessments, and social networking due diligence.
While comparisons to a dating site are apt on many levels, AltX goes well beyond pairing up basic financial requirements.
Optimal matches are presented in a simple graphical format that charts all three factors and highlights the junctions where successful partnerships are most likely to form. While comparisons to a dating site are apt on many levels, AltX goes well beyond pairing up basic financial requirements. More accurately, we provide advanced compatibility information — information that intelligently suggests future satisfaction in an investment relationship.
Unlike many existing services, the AltX platform considers not just quantitative data but also qualitative information in determining investment compatibility. The analytics look at both how the fund behaves in the market (its assets under management, annual returns, strategy, etc.) and how the fund interacts with investors (its values and goals, risk attitudes, decision-making approach, and communication style). Proprietary algorithms can then further refine matches to pinpoint funds with optimal cost structures, creating significant potential savings on management fees. By leveraging historical data sets, algorithms also allow an investor to “turn back the clock” on matches, locating contemporary hedge funds with a similar profile and strategy to a fund that the investor loved years ago. It’s the financial equivalent of being reunited with the one that got away.
Everything from conscious and unconscious risk-taking propensities to personality characteristics are measured via behavioral assessments that combine the strengths of standardized psychometric tests with surveys specific to investment decision making.
Perhaps the most novel aspect of AltX’s compatibility functionality lies in its application of behavioral science to the financial realm. Designed by iMatchative’s team of behavioral scientists, all of whom hold PhDs in psychology, AltX’s proprietary behavioral profiles and assessment tools allow funds and allocators to submit in-depth, completely private information on themselves and what they are seeking. Everything from conscious and unconscious risk-taking propensities to personality characteristics are measured via behavioral assessments that combine the strengths of standardized psychometric tests with surveys specific to investment decision making. Detailed feedback is immediately tabulated and reported to survey takers for new insights into their investment behavior. At the same time, AltX’s compatibility algorithms parse this information to surface more suitable matches.
It’s a novel blend of science and technology that works.
Another proprietary feature: a mechanism that translates publicly available and visible information about a fund, such as return patterns and growth of assets over time, into behavioral characteristics. The resulting behavioral profile — a mix of self-reported and inferred data — provides a comprehensive assessment that can be used to accurately determine a fund’s overall compatibility for allocators. It’s a novel blend of science and technology that works.
Powered by iMatchative, a financial technology company based in San Francisco, AltX provides a two-sided data analytics, monitoring, and matching platform that enables intelligent alternative investments through superior insights. Cloud-based, automated, and unbiased, AltX harnesses science and technology, financial and behavioral dimensions, proprietary algorithms, sophisticated analytics, relationship mapping, and targeted news to predict compatible investment relationships between funds and investors. The result is simpler and more effective search and discovery, stickier capital, and more productive and satisfying investment partnerships.