The State of Alternative Investments: A Global View

Transcription

1 The State of Alternative Investments: A Global View Keith Black, PhD, CFA, CAIA Showcase your

2 About CAIA Association The global leader in alternative investment education Non-profit established in 2002, based in Amherst, MA, with offices in Hong Kong, Singapore, Geneva, and London Over 8,700 current charterholders in more than 85 countries 28 vibrant chapters located in financial centers around the world More than 150 educational and networking events each year Excellence in AI education through the CAIA designation and the Fundamentals of Alternatives certificate program State of Alternative Investment 2

3 Alternative Investment Education Alternatives currently represent over $14 trillion in assets under management, while assets in liquid alternatives have grown substantially. The CAIA Association Mission: Establish the CAIA designation as the benchmark for alternative investment education worldwide Promote professional development through continuing education, innovative research and thought leadership Advocate high standards of professional ethics Connect industry professionals globally State of Alternative Investment 3

4 The CAIA Charter Designation Globally recognized credential for professionals managing, analyzing, distributing, or regulating alternative investments. Highest standard of achievement in alternative investment education. Comprehensive program comprised of a two-tier exam process: Level I assesses understanding of various alternative asset classes and knowledge of the tools and techniques used to evaluate the risk-return attributes of each one. Level II assesses application of the knowledge and analytics learned in Level I within a portfolio management context. Both levels include segments on ethics and professional conduct. State of Alternative Investment 4

5 Fundamentals of Alternative Investments The Fundamentals of Alternative Investments certificate program provides a foundation of core concepts in alternative investments. Fundamentals fills a critical education gap for those who need to understand the evolving landscape of alternative investments. Online, 20-hour, self-paced course Earns CE hours for the CIMA, CIMC, CPWA, CPA, and CFP designations Understand the core concepts in alternative investments Gain confidence in discussing and positioning alternatives State of Alternative Investment 5

6 S&P 500 P/E Ratio Are US Equity Markets Rich? S&P 500 P/E Ratio Source: CAIA and Bloomberg State of Alternative Investment 6

7 Yield Fixed Income 30+ Year Bull Market German Bund 10 Year US 10 Year Source: CAIA and Bloomberg State of Alternative Investment 7

8 Asset Class Performance Ending Sept Yr 5 Yr 10 Yr Ann. Vol Drawdown S&P % 16.4% 7.2% 16.4% -45.8% Barclays US Aggregate 5.2% 3.1% 4.8% 3.2% -2.4% US 60/ % 11.0% 6.7% 9.6% -27.4% MSCI World 11.4% 11.6% 4.5% 17.8% -49.0% Barclays Global Aggregate 8.8% 1.7% 4.3% 5.9% -7.2% Global 60/ % 7.7% 4.8% 11.4% -30.9% Bloomberg Commodities -2.6% -9.4% -5.3% 20.6% -65.9% HFRI Fund Weighted Composite 5.0% 4.4% 3.8% 7.7% -19.0% NCREIF Timberland 3.3% 6.9% 6.4% 4.9% -5.7% NCREIF Farmland 8.6% 15.1% 14.0% 5.6% 0.0% NCREIF Property 9.2% 11.2% 7.2% 6.0% -23.9% Cambridge Associates US Private Equity 8.7% 13.1% 10.7% 9.3% -25.2% Cambridge Associates US Venture Capital 2.2% 14.1% 10.3% 8.6% -18.4% Global Invested Alternative Assets Portfolio 6.4% 7.4% 6.2% 8.8% -23.6% US 40% Stocks/40% Bonds/20% Portfolio 9.5% 9.3% 6.4% 7.8% -22.2% Global 40% Stocks/40% Bonds/20% Portfolio 9.5% 6.9% 5.1% 9.5% -25.4% Source: CAIA and Bloomberg State of Alternative Investment 8

9 Public Pension Investment Returns Assumptions Nearly three-fourths of Public Pensions have reduced their investment return assumption since fiscal year 2010, resulting in a decline in the average return assumption from 7.91% to 7.52%. Should projected returns continue to decline, investment return assumptions are likely to also to continue their downward trend. State of Alternative Investment 9

10 Market Size of Investments Traditional Investments Alternative Investments U.S. Equity $21,100 Private Equity $4,200 Other Developed Market Equity $15,100 Hedge Funds $3,000 Emerging and Frontier Market Equity $4,100 Real Estate Equity $6,700 Emerging Market Debt $3,000 Infrastructure, Farmland, Timberland, and Private Energy $620 High Yield Bonds and Bank Loans $3,200 Commodity swaps, ETPs and MTNs $230 Dollar Bonds $19,300 Real Estate Debt $6,000 Other Bonds $21,100 Cash $5,100 Total (in $billions) $98,000 Total $14,750 Source: 2016 Estimates from Aon Hewitt, HFR, Barclays, Preqin State of Alternative Investment 10

11 Participation In Alternatives Source: Preqin State of Alternative Investment 11

12 Institutional Investor Allocation Source: Preqin State of Alternative Investment 12

13 Alternative Current and Target Allocation Source: Preqin State of Alternative Investment 13

14 Alternative Investment Allocations The largest endowments have average allocations of: 13% US equity, 19% non-us equity, 10% in fixed income and cash 24% hedge funds, 19% PE/VC, 15% real assets 30% 25% 20% 15% 10% 5% 0% Real Estate Hedge Funds Private Equity + Venture Capital Natural Resources Source: NACUBO-Commonfund Study of Endowments, 2016 State of Alternative Investment 14

15 Average SWF Asset Allocation 100% 90% 80% 15.4% 16.2% 25.7% 27.5% 70% 60% 35.3% 40.0% 50% 41.0% 37.6% 40% 30% 20% 10% 48.3% 43.8% 33.3% 34.8% 0% Cash and Fixed Income Equities Private Markets Source: How do Sovereign Wealth Funds Invest? A Glance at SWF Asset Allocation, E. Hentov, State Street Global Advisors, December 2015 State of Alternative Investment 15

16 Avg. Asset Allocation by Investor Type 20.0% 19.0% 18.0% 16.0% 14.0% 12.0% 11.0% 11.0% 10.0% 8.0% 8.3% 7.9% 9.0% 7.4% 6.0% 5.4% 5.8% 6.3% 6.2% 6.0% 4.0% 2.5% 3.2% 3.5% 2.0% 0.0% Private Equity Hedge Funds Real Estate Infrastructure Private Pensions Public Pensions Sovereign Wealth Funds Endowments and Foundations N/A Source: Preqin 2016 State of Alternative Investment 16

17 Alternative Current and Target Allocation 11.5% 11.0% 10.5% Average Allocation to Private Equity (As a % of AUM) 11.0% 10.7% 10.7% 10.7% 10.6% 10.3% 11.0% 10.5% 10.0% Average Allocation to Real Estate (As a % of AUM) 10.6% 10.5% 10.6% 10.3% 10.4% 9.9% 10.0% 9.5% 9.6% 9.5% 9.6% 9.6% 9.5% 9.0% 9.3% 9.2% 9.3% 9.0% 9.0% 8.5% 8.5% YTD Average Current Allocation Average Target Allocation 8.0% YTD Average Current Allocation Average Target Allocation 15.0% 14.5% 14.0% 13.5% 13.0% 12.5% 12.0% Average Allocation to Hedge Funds (As a % of AUM) 14.7% 14.4% 14.1% 13.8% 13.8% 13.7% 13.5% 13.3% 13.0% 13.1% YTD Average Current Allocation Average Target Allocation 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Average Allocation to Infrastructure (As a % of AUM) 5.7% 5.7% 5.4% 5.1% 5.2% 4.3% 4.3% 4.2% 3.9% 3.6% YTD Average Current Allocation Average Target Allocation Source: Preqin State of Alternative Investment 17

18 Alternative Current and Target Allocation 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Average Allocation to Natural Resources (As a % of AUM) 5.9% 6.5% 5.8% 5.9% 4.9% 5.0% YTD 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Average Allocation to Private Debt (As a % of AUM) 7.6% 7.6% 7.7% 5.7% 5.7% 5.9% YTD Average Current Allocation Average Target Allocation Average Current Allocation Average Target Allocation 12% 10% 8% 6% Average Allocation to Real Estate (As a % of AUM) 9.5% 9.6% 9.7% 9.8% 10.0% 7.6% 7.7% 8.7% 8.5% 8.9% Average Current Allocation 4% 2% Average Target Allocation Source: Preqin State of Alternative Investment 18 0%

19 2017 Hedge Fund Landscape According to Deutsche Bank s 15 th Annual Investment Survey, although performance was lackluster, Hedge Funds still attract interest. Survey Highlights: Manager Selection has become more critical On average, investors top quartile funds returned percent in 2016, while respondents bottom quartile managers were down percent Hedge Fund fee discussions intensifying Average management fee and performance fee that investors pay for their typical hedge fund investment is 1.59 percent and percent, respectively Quantitative strategies to play a bigger role in 2017 With advances in areas such as machine learning, quantum computing and the cloud they are seeing more interest and demand in bespoke portfolio solutions Global macro strategies most in-demand State of Alternative Investment 19

20 Key Issues Facing Hedge Funds in 2017 Performance 73% Fees 64% Perception of Industry by Public 49% Volatility/Uncertainty in Global Markets 42% Regulation 29% Governance 19% Transparency 18% Portfolio Management 18% Notable Investors Exiting the Asset Class 10% 0% 10% 20% 30% 40% 50% 60% 70% 80% Proportion of Respondents Source: Preqin State of Alternative Investment 20

21 Assets ($BN) Estimated Hedge Fund AUM Growth $3,500 $3,000 $3,018.3 $2,500 $2,000 $1,500 $1,000 $500 $0 ($500) Net Asset Flow Estimated Assets Source: HFR Global Hedge Fund Industry Report Year End 2016 Copyright All rights reserved. State of Alternative Investment 21

22 1/1/2003 6/1/ /1/2003 4/1/2004 9/1/2004 2/1/2005 7/1/ /1/2005 5/1/ /1/2006 3/1/2007 8/1/2007 1/1/2008 6/1/ /1/2008 4/1/2009 9/1/2009 2/1/2010 7/1/ /1/2010 5/1/ /1/2011 3/1/2012 8/1/2012 1/1/2013 6/1/ /1/2013 4/1/2014 9/1/2014 2/1/2015 7/1/ /1/2015 5/1/ /1/2016 AUM (MioEur) Estimated Alternative UCITS AUM Growth Source: LuxHedge Database State of Alternative Investment 22

23 AUM (billions) Liquid Alternative Market Growth $500 Liquid Alternative AUM Growth $450 $400 $350 $300 $250 $200 $150 $100 $50 $ Real estate-linked Nontraditional bond Bear Market Commodity Currency Equity Market Neutral Long/Short Equity Managed Futures Multialternative Source: CAIA and Morningstar State of Alternative Investment 23

24 Estimated Number of Funds: HF vs. FoF HF FoF Source: HFR Global Hedge Fund Industry Report Year End 2016 Copyright All rights reserved. State of Alternative Investment 24

25 Distribution of Industry Assets: Firm AUM Tier By # of Firm By Firm AUM Size 1.2% 1.8% 2.5% 3.7% 6.2% 13.2% < $100 Million < $100 Million 7.0% 49.4% $100 to $250 Million $250 to $500 Million 21.8% $100 to $250 Million $250 to $500 Million $500M to $1 Billion $500M to $1 Billion 9.3% $1to $5 Billion > $5 Billion 69.1% $1to $5 Billion > $5 Billion 14.9% Source: HFR Global Hedge Fund Industry Report Year End 2016 Copyright All rights reserved. State of Alternative Investment 25

26 Funds with Inflows vs. Outflows Single Manager Funds Fund of Funds 17.5% 44.2% 55.8% 82.5% Outflows Inflows Outflows Inflows Source: HFR Global Hedge Fund Industry Report Year End 2016 Copyright All rights reserved. State of Alternative Investment 26

27 Correlation Growth of $1 with the S&P 500 TR Rising Sector Dispersion Year Rolling SPDR Sector Correlation with S&P 500 Index $ $ $ $ $ $0.00 Consumer Discretionary Consumer Staples Energy Financials Health Care Industrials Materials Technology Utilities Average Growth $1 of SPX Source: CAIA and Bloomberg State of Alternative Investment 27

28 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Jun-16 Assets under Management ($bn) Private Capital AUM by Asset Class 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, Private Equity Private Debt Real Estate Infrastructure Natural Resources Source: Preqin Online Products State of Alternative Investment 28

29 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Jun-16 Dry Powder ($bn) Private Capital Dry Powder by Asset Class 1,800 1,600 1,400 1,200 1, Private Equity Private Debt Real Estate Infrastructure Natural Resources State of Alternative Investment 29 Source: Preqin Online Products

30 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Jun-16 Private Equity Assets Under Management 2,500 2,000 1, ,106 1,200 1,382 1,512 1,552 1,635 1,617 1, Dry Powder ($bn) Unrealized Value ($bn) Source: Preqin Online Products State of Alternative Investment 30

31 Dry Powder ($bn) Private Equity Dry Powder by Fund Type Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Buyout Venture Capital Growth Other Source: Preqin Online Products State of Alternative Investment 31

32 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Jun-16 Private Equity Annual Amount Called and Distributed $600 $500 $400 $300 $200 $100 $0 -$100 -$200 Capital Called-up ($bn) Net Capital Distributed ($bn) Capital Distributed ($bn) Source: Preqin Online Products State of Alternative Investment 32

33 Private Equity Assets under Management 1,800 1,600 1, , , Dry Powder ($bn) Unrealized Value ($bn) Buyout Venture Capital Growth Other Source: Preqin Private Equity Online State of Alternative Investment 33

34 PME Value (X) Venture Capital Public Market Equivalent 1.30 If PME index value (X) is >1, venture capital has outperformed the public market Vintage Year KS PME (X) Using Russell 2000 TR Source: Preqin Online Products State of Alternative Investment 34

35 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 No. of Deals Number and Aggregate Value of Venture Capital Deals Globally 3,500 Global Venture Capital Deals 50 3,000 2,500 2,000 1,500 1, Aggregate Deal Value ($bn) No. of Deals Aggregate Deal Value ($bn) Source: Preqin Online Products State of Alternative Investment 35

36 No. of Deals Number of Venture Capital Deals by Region 12,000 10,000 8,000 6,000 4,000 2, North America Europe Greater China India Israel Other Source: Preqin Private Equity Online State of Alternative Investment 36

37 No. of Exits Number of Venture Capital Exits by Region 1,600 1,400 1,200 1, North America Europe Greater China India Israel Other Source: Preqin Online Products State of Alternative Investment 37

38 Number and Aggregate Value of Venture Capital Deals in 2016 by Region 2016 Percentage Change from 2015 No. of Deals Aggregate Value ($bn) No. of Deals Aggregate Value North America 3, % -15% Europe 1, % -16% Greater China 2, % 20% India % -53% Israel % 27% Other % 30% *Figures exclude add-ons, grants, mergers, secondary stock purchases and venture debt. Source: Preqin Online Products State of Alternative Investment 38

39 Proportion of Respondents Natural Resources 50% 45% 40% Sectors Investors View as Presenting the Best Opportunities 38% 46% 35% 30% 25% 20% 15% 16% 19% 22% 16% 10% 5% 0% Agriculture/ Farmland Energy Renewable Energy Metals & Mining Timberland Water Source: Preqin Online Products State of Alternative Investment 39

40 Natural Resources Investor Views on the Macroeconomic Factors that Had the Biggest Impact on Their Natural Resources Portfolios in 2016 vs. Predictions for 2017 Commodity Price Volatility Slowdown in China's Economy Geopolitical Landscape Central Bank Intervention Low Interest Rates Currency Market Volatility Stock Market Volatility Brexit Vote 5% 5% 9% 14% 16% 16% 21% 23% 23% 30% 30% 32% 37% 36% 77% 77% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Proportion of Respondents Source: Preqin Online Products State of Alternative Investment 40

41 Key Challenges Facing Unlisted Infrastructure Managers in 2017 Valuations 53% Deal Flow 32% Ongoing Volatility/Uncertainty in Global Markets 23% Regulation 23% Fundraising 19% Performance 19% Fee Pressure 18% 0% 10% 20% 30% 40% 50% 60% Proportion of Respondents Source: Preqin Fund Manager Survey, November 2016 State of Alternative Investment 41

42 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Jun-16 Assets under Management ($bn) Unlisted Infrastructure AUM Dry Powder ($bn) Unrealized Value ($bn) Source: Preqin Online Products State of Alternative Investment 42

43 Average Management Fee of Unlisted Infrastructure Funds by Fund Size 1.8% 1.6% 1.4% 1.63% 1.51% 1.50% 1.50% 1.41% 1.44% 1.2% 1.0% 1.09% 1.05% 0.8% 0.6% 0.4% 0.2% 0.0% Less than $250mn $ mn $ mn $1bn or More Fund Size Mean Median Source: 2016 Preqin Private Capital Fund Terms Advisor State of Alternative Investment 43

44 Infrastructure Fund Managers that Consider ESG Factors as Part of the DD Process 4% 7% 11% 78% Consider for All Deals May Consider in Future Consider for Some Deals Never Consider Source: Preqin Fund Manager Survey, November 2016 State of Alternative Investment 44

45 Open-Ended Infrastructure Fund Launches Year of Launch/Liquidation No. of Funds Already in Market No. of Funds Launched No. of Funds Liquidated Source: Preqin Online Products State of Alternative Investment 45

46 Key Challenges Facing Private Real Estate Managers in 2017 Valuations 52% Volatility/Uncertainty in Global Markets 37% Fundraising 29% Deal Flow 26% Availability/Pricing of Debt Financing 23% Exit Environment 22% Performance 14% Regulation 14% Fulfilling Investor Demands 11% Fee Pressure 7% Other 18% 0% 10% 20% 30% 40% 50% 60% Proportion of Respondents Source: Preqin Fund Manager Survey, November 2016 State of Alternative Investment 46

47 Dec-00 Jun-01 Dec-01 Jun-02 Dec-02 Jun-03 Dec-03 Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Index Return (Rebased to 100 as of 31-Dec-2000) Performance: PrEQin vs. Equity & REIT Indices PrEQIn Real Estate Index S&P 500 Total Return Index PrEQIn Private Equity Index MSCI US REIT Total Return Index Source: Preqin Real Estate Online State of Alternative Investment 47

48 PME Value (X) Real Estate: Public Market Equivalent (PME) If PME value (X) is >1, private real estate has outperformed the public market KS PME Using MSCI US REIT KS PME Using S&P 500 TR Vintage Year Source: Preqin Real Estate Online State of Alternative Investment 48

49 1/1/2001 5/1/2001 9/1/2001 1/1/2002 5/1/2002 9/1/2002 1/1/2003 5/1/2003 9/1/2003 1/1/2004 5/1/2004 9/1/2004 1/1/2005 5/1/2005 9/1/2005 1/1/2006 5/1/2006 9/1/2006 1/1/2007 5/1/2007 9/1/2007 1/1/2008 5/1/2008 9/1/2008 1/1/2009 5/1/2009 9/1/2009 1/1/2010 5/1/2010 9/1/2010 1/1/2011 5/1/2011 9/1/2011 1/1/2012 5/1/2012 9/1/2012 1/1/2013 5/1/2013 9/1/2013 1/1/2014 5/1/2014 9/1/2014 1/1/2015 5/1/2015 9/1/2015 1/1/2016 5/1/2016 9/1/2016 1/1/2017 Yield US Average Cap Rate vs. US 10 Year Yield Spread US Avg. Cap Rate US 10 Year Yield Source: CAIA and Bloomberg State of Alternative Investment 49

50 Real Estate: Aggregate Capital Raised ($bn) Core Value-Added Opportunistic Source: Preqin Real Estate Online State of Alternative Investment 50

51 Structured Products Post Dodd-Frank, OTC trades are increasingly using central clearing to report and margin transactions in CDS indices, as well as single name corporate and sovereign CDS. Source: ICE State of Alternative Investment 51

52 Billions U.S. CMBS Issuance By Year Source: CRE Finance Council State of Alternative Investment 52

53 $, Bil Historical U.S. CLO Issuance Source: The Royal Bank of Scotland, Fitch Ratings State of Alternative Investment 53

54 The CAIA Charter The Global Benchmark In Alternative Investment Education September 2017 Exam

55 Global Presence State of Alternative Investment 55

56 Member Asset Class Focus and Regional Distribution CAIA Members work across a variety of asset classes globally. Hedge Funds 65% Fixed Income Alternatives 50% Private Equity 45% Real Estate 41% Commodities 39% Managed Futures 32% Real Assets Infrastructure, Farmland, Timberland 30% Structured Products 29% Venture Capital 18% % 13% 55% Americas Asia-Pacific Europe, Middle-East, Africa Data: Member Survey, December, 2015 State of Alternative Investment 56

57 Membership Growth 10,000 8,000 8,700 6,000 5,700 4,000 3,265 2, * Series *2016 Data through May 31, 2016 State of Alternative Investment 57

58 Level I Curriculum Third Edition Core Concepts Professional Standards & Ethics Introduction to Alternative Investments Real Assets Hedge Funds Private Equity Structured Products Risk & Portfolio Management State of Alternative Investment 58

59 Level II Curriculum Third Edition Advanced Core Concepts Professional Standards & Ethics Venture Capital & Private Equity Hedge Funds & Managed Futures Real Estate/Real Assets Commodities Structured Products Manager Selection, Due Diligence & Regulation Research Issues & Current Topics Risk & Risk Management Asset Allocation & Portfolio Management State of Alternative Investment 59

60 Level II Curriculum Recent Changes The 3 rd Edition of the CAIA Level II textbook provides comprehensive data models, due diligence processes, analysis, and strategies to keep you current and relevant in the field of alternative investments. New or Updated Topic Areas Enhanced coverage of: Family offices and sovereign wealth funds. Alternative investment groups, such as structured products and infrastructure Private equity Real assets Hedge funds including credit strategies and operational due diligence Structured products featuring two sections focused on fixed-income derivatives and asset-backed securities, and insurance-linked products and hybrid securities State of Alternative Investment 60

61 Level I Exam Topics Level I Topic Approximate Exam Weight Professional Standards and Ethics 15% 20% Introduction to Alternative Investments 20% 25% Real Assets including Commodities 10% 20% Hedge Funds 10% 20% Private Equity 5% 10% Structured Products 10% 15% Risk Management and Portfolio Management 5% 10% State of Alternative Investment 61

62 Level II Exam Topics Level II Topic Approximate Exam Weight Multiple Choice Constructed Response Professional Standards and Ethics 0% 10% Current and Integrated Topics 0% 10% Asset Allocation and Institutional Investors 8-12% 0-10% Private Equity 11-15% 0-10% Real Assets 13-17% 0-10% Commodities 5-7% 0-10% Hedge Funds and Managed Futures 18-22% 0-10% Structured Products 5-7% 0-10% State of Alternative Investment 62

63 Examination Format and Scheduling Level I Level II Section 1: 100 questions / 120 minutes Section 2: 100 questions / 120 minutes Section 1: 100 questions / 120 minutes Section 2: 3 essays / 120 minutes Both CAIA exams are administered internationally in computerized format exclusively at proctored Pearson VUE test centers. Once you have purchased your Level I or Level II exam, you will receive a confirmation with a link that will allow you to schedule your exam appointment. State of Alternative Investment 63

64 Candidate Support/Tools Study guides outlining keywords and learning objectives Workbooks with sample exercises Candidate orientation sessions Study calculator to plan your course of study Third-party preparatory course and programs Level I & Level II sample exams State of Alternative Investment 64

65 Fees Fees (in USD) Level I Level II Membership (annually) Program Enrollment $400 Full $350 Exam Registration $1,250 $1,250 Affiliate $175 TOTAL $1,650 $1,250 Retired $175 Early Registration Discount -$100 -$100 Retake Fee $450 $450 Curriculum cost (in USD) Level I Level II Textbook & readings $125 $125 Standards of Practice handbook $0 $0 State of Alternative Investment 65

66 Pass Rates 90% 70% 68% 62% 67% 67% 66% 63% 68% 66% 66% 67% 59% 70% 61% 66% Level I Level II 50% State of Alternative Investment 66

67 CAIA Charter State of Alternative Investment 67

68 Academic Partnerships - Americas State of Alternative Investment 68

69 Academic Partnerships - EMEA State of Alternative Investment 69 A complete list of CAIA s academic partners globally can be found at caia.org.

70 Academic Partnerships - APAC A complete list of CAIA s academic partners globally can be found at caia.org. State of Alternative Investment 70

71 Association Partnerships State of Alternative Investment 71

72 Sample Employers Banks Consultants Fund Managers Regulators Pension Funds & Endowments HSBC Citi Credit Suisse UBS Barclays Capital Deutsche Bank Cambridge Associates New England Pension Consultants Mercer Towers Watson Blackrock Goldman Sachs J.P. Morgan Morgan Stanley State Street U.S. SEC MAS Singapore SFC Hong Kong FCA UK CIMA Cayman APG Teacher Retirement System of Texas Chicago Teachers Ontario Teachers CalPERS Harvard Management Co. State of Alternative Investment 72

73 CAIA is Preferred Top companies seek to hire CAIA Charterholders. Sample job postings from the CAIA Career Center Risk Management - Associate Industry certifications, such as a CFA, CAIA, or FRM, are a plus. International Relationship Manager. CFA, CAIA or working toward preferred. Senior Quantitative Research Analyst. CFA, CAIA, CIMA Equity Investment Research - Manager. CIMA, CAIA, and/or CFA charter holders or candidates will be looked favorably upon. International Trading Manager MBA, CFA, CAIA or CMT preferred Senior Credit Specialist CFA / CAIA / FRM / PRM is considered highly advantageous. State of Alternative Investment 73

74 Career Value of the CAIA Charter Why maintain an active CAIA membership? Here s what Members say. 83% To use the CAIA designation. 67% To position myself for future career opportunities. 66% To maintain my knowledge of alternatives and stay current in the industry. 46% To network with other CAIA Members. 35% To take advantage of CAIA Chapters educational and social events. Data: Member Survey, December, 2015 State of Alternative Investment 74

75 Member Benefits Use of CAIA marks in professional documents Chapter educational and networking events Global network of more than 8,700 Members Globally-recognized designation Education and Research at CAIA.org Self-evaluation Tool Ongoing education CAIA Career Center State of Alternative Investment 75

76 Exams September 2017 Notable Dates APR MAY JUN JUL AUG SEPT Early Registration Apr 3 May 15, 2017 Regular Registration May 16 Aug 7, 2017 Level I Exam Sept 4-15, 2017 Level II Exam Sept 18 29, 2017 State of Alternative Investment 76

77 Global Business Development Contacts AMERICAS ASIA-PACIFIC EUROPE, MIDDLE-EAST, AFRICA Millissa Allen, CAIA Amherst Managing Director of Business Development direct: Cody Durant Amherst Business Development Manager direct: Joanne Murphy Hong Kong Managing Director, APAC direct: Wendy Leung Hong Kong Assistant Director, APAC direct: Laura Merlini, CAIA Geneva Managing Director of Business Development direct: Tammy Johnston London Global Business Development Associate Peter Douglas, CAIA Singapore Principal direct: State of Alternative Investment 77

78 The CAIA Charter The Global Benchmark In Alternative Investment Education