Explosive growth in the use of alternative investments and
calls for greater hedge fund regulation have heightened the
need for standards within the industry. In Amherst, Mass.,
a not-for-profit organisation known as the Chartered Alternative
Investment Analyst Association, has taken steps to fill
the need. Designed for alternative investment specialists,
the two-level examination programme covers real estate, commodities,
private equity, managed futures and hedge funds. Candidates
for the CAIA designation are asked to analyse, differentiate
and evaluate situations pertaining to the alternative investment
markets, and to understand industry-accepted standards for
According to the organisation's Executive Director, Craig
Asche, the programme has attracted over 1,000 registrants
from more than 300 institutions since its inception in 2002.
Participants range in experience from new entrants to seasoned
professionals and include investment advisors, financial consultants,
security analysts, fund managers and administrators, lawyers,
accountants and academics. Initially, it was only individuals
who signed up for the programme, Asche noted, but more recently
financial institutions (including Citigroup, The Government
of Singapore Investment Corporation and the Pacific Alternative
Asset Management Company) have been registering teams of specialists
To date, CAIA enrollees have come from 34 different countries:
60% are based in North America, 25% are in Europe, and the
remainder resides in Asia, South Africa, The Middle East and
South America. "But Asia alone will climb to 25% within
one to two years," says Asche. "We're seeing a significant
uptick in interest from the region."
In time, Asche believes that the CAIA designation will carry
the same clout in the alternative investment space as a CFA
carries in the traditional sector. "This designation
is rapidly gaining credibility within the industry,"
says Asche, formerly of Salomon Brothers and Swiss Bank Corporation.
"It gives advisors a leg up on the competition, and advisees
a higher comfort level knowing their advisor is qualified.
In fact, we now have headhunters calling us for leads on qualified
The association was co-founded by Thomas Schneeweis (Director
of CISDM, Editor of Institutional Investor's Journal of
Alternative Investments and Board Member for the Managed
Funds Association) and Florence Lombard (Executive Director
of AIMA), both of whom serve on CAIA's Board of Directors.
Alexander M. Ineichen, the other CAIA Board Member and Global
Head of Alternative Investment Strategies (AIS) Research at
UBS Investment Research, says that the course allows financial
professionals with a broad array of educational backgrounds
to move up the learning curve quickly and in a structured
fashion. Ineichen is author of the book Absolute Returns
- Risk and Opportunities of Hedge Fund Investing as well
as numerous research publications including the two "In
Search of Alpha" papers.
Other veterans on the CAIA team include Mark Anson, Chief
Investment Officer of the California Public Employees' Retirement
System (CalPERS) and Jane Buchan, Managing Director of the
Pacific Alternative Asset Management Company (PAAMCO). Anson
is a CAIA Charterholder and a member of the Association's
Curriculum and Examination Committee, while Buchan serves
on the Association's Advisory Board
Developed over a four-year period, the programme covers a
broad range of alternative investment issues. The Association
recommends candidates spend a minimum of 120 hours per level
in preparation. Level I culminates in a four-hour examination
comprised of 200 multiple choice questions. Level II runs
three and one-half hours and combines 100 multiple choice
questions with three essay questions. The exams are administered
throughout the world by Baltimore-based Thomson Prometric
and are available every February and July. While the curriculum
is designed for self-study through assigned reading and study
guides, candidates wishing additional assistance can participate
in CAIA preparatory courses offered by several independent
Information on the Chartered Alternative Investment Analysts
| Fees Table
||$200 per level
||$1,000 per level
|* All fees are quoted in U.S. dollars and do not include cost of purchasing the required reading materials. For information on available discounts, please contact CAIA directly.
Level I Sample Question
The hedge fund strategy that invests in spread
trades (that is, the simultaneous purchase of one security
and the sale of another when the economic relationship between
the two securities has become mispriced) is known as:
A. convertible bond arbitrage.
B. relative value arbitrage.
C. event driven.
D. market neutral.
E. equity long/short.
Answer = B: relative value arbitrage
- successfully complete the CAIA Level II exam within three
years of passing Level I;
- hold a U.S. Bachelor's degree (or equivalent) and possess
more than one year of acceptable professional experience
in the financial industry; alternatively, possess a minimum
of four years' acceptable professional experience in the
- agree to abide by the Member Agreement of the CAIA Association;
- and establish and maintain membership in the CAIA Association.