Professional Designations

What is a Chartered Alternative Investment Analyst (CAIA)?

By  Brian Thorp

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A Chartered Alternative Investment Analyst (CAIA) is an internationally recognized credential. It’s specifically designed for financial professionals who manage, analyze or regulate venture capital, private equity, hedge funds, real estate and other alternative investments. 

Oftentimes, CAIA designation holders work as portfolio managers, analysts, consultants, brokers, risk managers and traders.

Let’s take a closer look at what this financial certification is, what it takes to earn it and how you may benefit from working with a CAIA. 

What is a Chartered Alternative Investment Analyst (CAIA)?

CAIA holders have a comprehensive knowledge and expertise in alternative investments. The exam they’ve passed is made up of two parts: Level I and Level II. Level I focuses on alternative asset classes and the techniques necessary to evaluate their risk-return. Level II applies the knowledge accumulated in Level I to portfolio management. 

While there are no prerequisites required to sit for the CAIA exam, candidates must have a strong understanding of investment and financial topics to pass. Some of these topics include trading theories of alternative investments, qualitative analysis, benchmarking, and indexation. 

The CAIA exam is administered by the CAIA Association, which is a non-profit founded by the Alternative Investment Management Association (AIMA) and the Center for International Securities and Derivatives Markets (CISDM) in 2002. 

Since the initial exam in 2003, more than 11,000 financial professionals have earned their CAIA designations. The CAIA is a great way for them to further increase their knowledge and experience in alternative investments and stand out in the industry. 

Should You Hire a CAIA?

A CAIA has the advanced alternative investment expertise and depth of financial knowledge that may help you if you:

  • Need a Professional to Analyze Investments: You can count on a CAIA to analyze investment risk and return data, complete peer benchmarking, and conduct a variety of investment operations duties. They have the specialized alternative investment and risk management knowledge necessary to excel in this type of work. 
  • Would Like Advice on Alternative Investments: If you’re interested in alternative investments like real estate, hedge funds, and private equity but unsure of how to use them to meet your financial goals, a CAIA is a good option. They can help you come up with smart investment strategies that generate the results you’re hoping for. 
  • Are a High Net Worth Investor: A CAIA can offer guidance on your long-term investment plan, especially if it includes assets other than stocks, bonds, and cash. You may meet with them to evaluate your investment vehicles, project expected returns, and figure out how to make the most out of the alternative assets you currently have and plan to accumulate in the future. 

While alternative investments are often worthwhile, they can also be risky as they’re usually unpredictable and volatile. Therefore, if you work with them in any capacity, it’s wise to hire a CAIA who is an expert in the complex alternatives market. They understand alternatives at a more advanced level than general investors and can use their knowledge to uncover challenges and opportunities.

What Does it Take to Earn and Maintain the CAIA?

Those who hope to earn a CAIA designation must fulfill certain requirements set forth by the  CAIA Association. Here’s a brief overview of what that they are.

Education and Experience 

To take the CAIA exam, a financial professional must hold a U.S. bachelor’s degree and more than one year of relevant experience. They may also have four years of relevant experience. This experience must be in the banking, financial, or investing fields. In addition, CAIA candidates need to provide at least two professional references and follow the terms of the CAIA Association Member Agreement.

Exam

CAIA candidates are required to pass Level I and Level II of the exam. Level I features 200 multiple-choice questions and lasts four hours. It focuses on topics such as real assets, hedge funds, commodities, private equity, and structured products. 

Level II consists of 100 multiple-choice questions as well as several essay questions and lasts three and a half hours. It covers topics like asset allocation and portfolio management, due diligence, risk management, and regulation. 

Each level can be taken in March and September. Candidates must pass the Level II exam within three years of when they pass Level I. Both exams are administered on the computer and proctored by Pearson via testing centers across the world. 

Continuing Education

While there are no continuing education requirements, CAIAs must maintain self evaluation through a tool the Chartered Alternative Investment Analyst Association develops and issues every three years. They are also required to pay their annual membership dues. 

Disclaimer: The information in this article is not intended to encourage any lifestyle changes without careful consideration and consultation with a qualified professional. This article is for reference purposes only, is generic in nature, is not intended as individual advice and is not financial or legal advice.

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