The CAIA Qualification
The Chartered Alternative Investment Analyst (CAIA) qualification was created in 2002. The CAIA was designed because there was a need for a specific designation to distinguish those practitioners in alternative investment analyst jobs to those trading in traditional investments. The range and scope of alternative investments differ greatly from conventional investment models such as mutual funds, stocks and bonds.
The new exam was designed for any chartered financial analyst working within the field of alternative investments, who was routinely dealing in applications such as venture capital, private equity, hedge funds or real estate.
The CAIA Course Structure
Comprising two stages, Level 1 and Level 2, the CAIA alternative investment course is open to all graduates with a relevant degree and who have achieved a minimum of one years’ work experience in the investment sector.
Level 1 Study
Topics included in the Level 1 study programme are shown below with their individual weightings:
• Professional Standards and Ethics (15-20 per cent)
• An Introduction to Alternative Investments (15-20 per cent)
• Real Assets (5-10 per cent)
• Hedge Funds (15-20 per cent)
• Commodities (5-10 per cent)
• Private Equity (5-10 per cent)
• Structural Products (5-10 per cent), and
• Risk and Portfolio Management (15-20 per cent)
Hedge Funds Module – Course Syllabus
If you are studying the Hedge Fund element of the Level 1 investment analyst course, then you are tasked with achieving a comprehensive set of objectives before the completion of the module:
1. Distinguish the differing features of Hedge Funds, identify their concentration and growth over time and comprehend Hedge Fund fees.
2. Understand different strategies including; skewness, variance, the kurtosis of returns, and means, and explain their function.
3. Explain the reasons why Hedge Funds may be incorporated into an investment programme and describe the associated relationship between trading and market volatility.
4. Describe the distinctions between macro and managed future funds, global macro funds and the historical performance of macro investing.
5. Demonstrate your knowledge of event driven strategy returns and active investing, merger arbitrage and distressed securities Hedge Funds.
Examples of the type of questions which you will be expected to answer during the progression of the module include:
1. Identify the key components (information co-efficient and breadth) of the Fundamental Law of Active Management (FLOAM).
2. Define non-active bets and describe their role in the FLOAM.
3. Describe how the FLOAM can be used to comprehend changes in the information ratio.
4. Describe how to recognise the trade-offs involved in the changing or maintenance of the information ratio.
The CAIA recommend that you dedicate a minimum of 150 to 200 hours for the study of the Level 1 course and 200 plus to follow the Level 2 programme.
The Level 1 examination is five hours in duration and is scheduled as follows:
• Tutorial to describe the format and structure of the assessment (5 minutes)
• Signing of the mandatory non-disclosure agreement (5 minutes)
• Section 1, consisting of 100 multiple choice questions (120 minutes)
• Optional comment period (10 minutes)
• Optional break (30 minutes)
• Section 2, consisting of 100 multiple choice questions (120 minutes)
• Optional comment period (10 minutes)
The assessment is delivered as a computer based application, which you may access through one of the following Pearson Vue Test Centres; Watford, Reading, Holborn or Crawley.
How to Study for the CAIA
The sole UK provider of the CAIA finance analyst qualification course is Kaplan Financial in London. They offer a range of classroom based study programmes from their location in Moorgate, where you have the option of:
• four weekdays
• 10 evening courses
• a full weekend revision package, and
• one-off mock examination
Fees for the main CAIA investment analyst courses start from £1,495.
If you prefer to use a self-study, distance learning application, you may use the material provided by Kaplan or Schweser. Their Premium Plus package (from 839 US dollars) includes the:
• course review pack
• study tools
• mock exams, and
• a four hour online review of the Level 1 Syllabus topics
Also included is a comprehensive question bank containing worked examples from past papers, and a three book set of the course study notes. You will be provided with a weekly online programme delivering 27 hours of tuition over nine weeks, access to student forums and useful tips and advice from their tutorial support.
CAIA Registration and Enrolment
The examination assessments for the CAIA qualifications are held in March and September each year. If you wish to sit your exam in September 2012, then you must ensure you have registered your intention with the CAIA by 31st July. For those who intend taking their assessment in March of 2013, registration opens on 1st October 2012 and closes on 4th February 2013.
You are required to pay enrolment fees (from 400 US dollars) to the CAIA when you initially register for the course and examination fees (from 1,250 US dollars) for each of the Level 1 and Level 2 assessments.