What Is a Chartered Alternative Investment Analyst (CAIA)?

Chartered Alternative Investment Analyst (CAIA) is a professional designation granted by the Chartered Alternative Investment Analyst Association to candidates who have completed Level I and Level II examinations. The Chartered Alternative Investment Analyst Association has established the designation of CAIA to certify that the holders have met the association’s educational standard for specialists in the area of alternative investments. The alternative investments that a Chartered Alternative Investment Analyst is trained to assess include hedge funds, venture capital, private equity, funds of funds, derivatives, and real estate investments.

Key Takeaways

  • Chartered Alternative Investment Analysts are trained to assess alternatives investments such as hedge funds, venture capital, and private equity.
  • A CAIA designation is also useful for people managing derivatives books or trading desks.
  • Although the CFA includes alternative investments, the CAIA coverage is more in-depth.

Understanding Chartered Alternative Investment Analyst (CAIA)

The Chartered Alternative Investment Analyst designation is meant for financial professionals who will be working primarily in the alternative investment space. This usually means people working for hedge funds and private equity, although a CAIA designation is also useful to people working for traditional financial institutions in non-traditional roles, like those managing the derivatives book or the trading desk.

Requirements for the Chartered Alternative Investment Analyst Designation

In order to receive the designation, individuals must have at least one year of professional experience and a U.S. bachelor's degree and must pass a two-level curriculum that includes topics ranging from qualitative analysis and trading theories of alternative investments to indexation and benchmarking. The Level I exam includes 200 multiple-choice questions on:

  • Professional Standards and Ethics
  • Hedge Funds
  • Introduction to Alternative Investments
  • Private Equity
  • Risk Management and Portfolio Management
  • Structured Products
  • Real Assets

The Level II exam includes 100 multiple-choice questions and three sets of essay questions. Questions are updated each year to reflect industry progress. The questions cover:

  • Commodities
  • Professional Ethics and Standards
  • Private Equity
  • Asset Allocation and Institutional Investors
  • Structured Products
  • Hedge Funds and Managed Futures
  • Real Assets

The exams are administered in March and September, and the Chartered Alternative Investment Analyst Association recommends at least 200 hours of study.

The cost of enrollment is $400, and Level I and Level II exam registration is $1,250 for each exam. Once certified, there are annual membership dues of $350 for one year or $650 for two years, and a self-evaluation tool to be completed every three years to maintain the designation. Early registrants and members of certain partner organizations may qualify for scholarships or discounts to help defray the cost of enrollment and sitting for the Level I and Level II exams.

Differences Between the CAIA and the CFA

Similar to earning the Chartered Financial Analyst (CFA) designation, possessing the CAIA designation provides individuals with access to jobs, member chapters and sources of education. Because the scope of alternative investments is dramatically different from that of conventional investments, such as stocks, bonds, mutual funds, and exchange-traded funds, the CAIA designation was created to distinguish those individuals who are best qualified in dealing with this class of investments. The CFA includes content on alternative investments, but the CAIA dives much deeper into the topic and the valuation methods specific to each.

Of the two, the CFA is seen as the more difficult designation to get, as the exams cover more content and have historically had lower pass rates than the CAIA exams. Overall, the CFA is seen as an excellent general designation for the financial industry, but the CAIA can be a difference-maker in niche areas of finance like private equity or hedge funds.