CAIA Level I study guide
CAIA Level I · Work through your exam, one topic at a time.
The CAIA Charter is a professional credential from the Chartered Alternative Investment Analyst Association, which describes itself as "the global center for those driving capital innovation." The Association frames the Charter around specialized knowledge of alternatives, portfolio construction, and the evolving ways capital is allocated, so that holders can connect ideas across strategies, structures, and disciplines. It is aimed at professionals across 100+ countries, industries, and roles, and the site maintains a separate pathway page for CFA charterholders as well as academic partnerships with universities. The CAIA Level I study guide has 8 sections and about 2,426 words.
01Professional Standards and Ethics
CAIA ethics questions turn on a small set of duties: act with integrity and in a manner that reflects well on the profession; place client interests ahead of your own; be independent and objective; avoid, manage, or disclose conflicts; keep information confidential; deal fairly with all clients; never trade on material nonpublic information; and maintain competence. Learn to separate 'must' (conduct that is prohibited) from 'should' (recommended best practice) - the exam often probes that boundary.
308 words, about 2 min02Introduction to Alternative Investments
Alternative investments - hedge funds, private equity, real assets, structured products - share traits that break standard portfolio math: limited liquidity, negotiated fees, appraisal-based or infrequent pricing, leverage, and concentrated exposures. Know the taxonomy and the underlying return drivers: manager skill, illiquidity premium, leverage, and diversification or insurance value.
291 words, about 1 min03Traditional Investments
Traditional investments cover public equity and fixed income. Know equity valuation (discounted cash flow, dividend discount, multiples), the risk–return framework (CAPM, beta, the security market line), portfolio theory (efficient frontier, diversification), market efficiency, and performance measurement (Sharpe ratio, information ratio, tracking error, attribution).
297 words, about 1 min04Risk Management and Portfolio Management
Candidates must handle volatility, beta, VaR, CVaR (expected shortfall), stress testing, scenario analysis, and drawdown. VaR is a loss threshold at a given confidence level over a horizon; it says nothing about the size of losses beyond it, which is why CVaR and stress tests matter.
292 words, about 1 min05Hedge Funds and Managed Futures
Hedge funds are pooled, lightly regulated vehicles using long/short positioning, leverage, and derivatives. Map each strategy to its return driver: equity long/short (stock selection plus net and gross exposure), event driven (merger arbitrage, distressed, activism), relative value (convertible arbitrage, fixed income arbitrage, statistical arbitrage), global macro (directional views on rates, FX, commodities), and managed futures or CTAs (systematic trend following, often showing crisis-alpha behavior).
315 words, about 2 min06Private Equity and Private Debt
Private markets are raised through limited partnerships: the GP manages the fund, LPs commit capital that is drawn down over an investment period, and proceeds return as distributions. Capital is locked for years, so the J-curve - early negative returns from fees, later gains - is normal.
319 words, about 2 min07Real Assets
Real assets are physical assets or claims on them: real estate (direct property, REITs, private funds), infrastructure (toll roads, utilities, energy midstream), and natural resources (commodities, farmland, timber, energy, and mining). They are held for income, inflation sensitivity, and diversification.
307 words, about 2 min08Structured Products
Structured products pool cash flows - mortgages, auto loans, credit cards, corporate loans - and issue claims with different seniority. Tranching reallocates credit risk: senior tranches absorb losses last, mezzanine next, equity first.
297 words, about 1 min