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Chartered Alternative Investment Analyst (CAIA)

Chartered Alternative Investment Analyst (CAIA)

More than half of Americans have invested in a stock-related fund. Most invest through their retirement accounts, often with little direction beyond selecting a 401(k) fund. But stocks are just one way to grow your money. Many investors are exploring alternative investments. There is money to be made here, and one of the best experts to explain that is the Chartered Alternative Investment Analyst.

It would be wise to engage a financial advisor, who can offer you valuable investing advice. 

What Are Alternative Investments?

“Alternatives,” as investors call them, are asset classes beyond the equity and debt structures that make up traditional investments. They can include real estate, gold, silver or other commodities, infrastructure projects, private commercial enterprises and almost any other valuable asset that investors don’t ordinarily seek out. They can also include investing in traditional assets in non-traditional ways, such as short-selling stocks.

Alternative investments can sometimes take traditional forms. Many are managed through mutual funds, index funds or similar structures. For example, a single fund could collect precious metals in order to give investors access to that market without exposure to a commodities exchange. This field has grown significantly in recent years. According to a report from McKinsey, institutional investors and retail investors alike make alternatives about 25% of their portfolios.

What Is a Chartered Alternative Investment Analyst (CAIA)?

Chartered Alternative Investment Analyst (CAIA)

A CAIA certification is given to financial advisors and professionals who work with alternative investments. Someone with this certification doesn’t necessarily work exclusively or even primarily in alternative investments. It simply represents a degree of accomplishment and expertise with that sector of the market.

This certification means someone is generally adept at helping people work with alternative investments. They understand the alternatives market better than a general investor and can compare it with the traditional investment market to find opportunities.

A variety of financial professionals might use the CAIA certification in their work. This can include financial advisors giving direct advice to clients; portfolio managers at mutual funds helping to build alternative-inclusive funds; or institutional advisors helping firms to manage their assets. A bank, for example, might hire a CAIA to help it build loans in alternative spaces.

How Do You Become a CAIA?

The CAIA certification is issued by the Chartered Alternative Investment Analyst Association. This is the only organization which offers the CAIA certification.

To receive a CAIA certification, a candidate must meet the following requirements:

  • First, possess either a bachelor’s degree and more than one year of relevant experience or possess four years of relevant experience.
  • Further, take and pass the Level 1 CAIA exam, covering risk-return profiles of major alternative investment asset classes, and the Level 2 CAIA exam, covering the application of alternative investment classes to portfolio management.
  • Finally, maintain a self-evaluation every three years, as developed and issued by the Chartered Alternative Investment Analyst Association.

An enrollment fee of $400 is assessed for the Level 1 exam but not the Level 2 exam. Early registration for taking the Level 1 exam and the Level 2 exam for the first time is $995; late registration for taking the Level 1 exam and the Level 2 exam for the first time is $1,395. The retake fee is $450 for the March 2023 exam but rises to $795 for the September 2023 exam. A one-year membership fee for this certification is $350; a two-year membership fee is $650.

Why Become a CAIA?

While the CAIA certification is not one of the industry’s better known credentials, it carries weight. As the alternative investment market picks up steam, an increasing number of businesses, firms, and individual investors seek financial professionals who understand this space well. This certification can open doors for someone interested in working in non-traditional asset classes.

What’s more, as the scope of the alternatives market grows it has become important for financial professionals to understand non-traditional asset classes.

Contrary to the old view, alternative investments are a broad field. Although the bulk of the money goes to traditional stock and debt (fixed-income) securities, arguably the majority of global investment opportunities would be considered alternative. Alternative investments have several features that have made them attractive to investors. Among others, these include:

  • Counter-cyclical behavior: Many alternative investments move counter-cyclically to the stock market, rising when it falls and vice versa.
  • Unusual or inefficient markets: Many of these investments exist in poorly functioning or otherwise inefficient markets. This allows investors opportunity to capitalize on the mistakes made by others.
  • Variety: An alternative investment can be a plot of land, jewelry, an antique cello or rare book. It can include a small business or a patch of ore. The sheer variety of alternative investments means that savvy investors can look for opportunities in new places.

Bottom Line

The same features that make alternatives worthwhile also make them dangerous. They are often volatile and unpredictable, without the vast data sets that investors use to build some stability to trading on the stock market.

This makes it all the more important for investors to hire a professional who understands the alternatives market, such as a CAIA.

Learn More About Investing

Chartered Alternative Investment Analyst (CAIA)
  • Think a CAIA can help diversify your portfolio? It may be time to track one down. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • Maintaining a healthy investment portfolio is an excellent way to plan for the future, whether you’re looking at buying a home, retirement or just putting away a nest egg. Consider looking through our investment guide for tips and advice on how best to do that.
  • A key element of investing is asset allocation. How should you spread your portfolio to meet your personal goals and your tolerance for risk? Fortunately, our asset allocation calculator can help you start figuring that out.

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