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Chapter 1: Foundations of Alternative Investments

Chapter 1: Foundations of Alternative Investments (CFA Level 1): Practical explanations of core ideas, with key terms, formulas, and common exam pitfalls.

In this section

  • Defining Alternative Investments and Market Overview
    Defining Alternative Investments and Market Overview (CFA Level 1): Broad Definition of Alternative Investments, Key Differentiators, and Global Market: Size and Scope. Key definitions, formulas, and exam tips.
  • Core Differences from Traditional Investments
    Core Differences from Traditional Investments (CFA Level 1): Liquidity Differences, Why Liquidity Matters, and Fee Structures. Key definitions, formulas, and exam tips.
  • Structures, Methods, and Vehicles
    Structures, Methods, and Vehicles (CFA Level 1): Common Legal Structures, Limited Partnerships and Limited Liability Companies, and Commingled Funds, Separately Managed Accounts, and Co-Investments. Key definitions, formulas, and exam tips.
  • Regulatory Considerations and Key Market Participants
    Regulatory Considerations and Key Market Participants (CFA Level 1): Regulatory Landscape in Alternative Investments, Major Regulatory Bodies, and U.S. Securities and Exchange Commission (SEC). Key definitions, formulas, and exam tips.
  • Industry Trends and Growth Drivers
    Industry Trends and Growth Drivers (CFA Level 1): Historical Growth in Alternative Investments, Macroeconomic Drivers, and Low-Interest-Rate Environments. Key definitions, formulas, and exam tips.
  • Comparative Asset Class Analysis
    Comparative Asset Class Analysis (CFA Level 1): Time Horizon Considerations, Correlation Patterns and Diversification, and Key Performance Metrics. Key definitions, formulas, and exam tips.
  • Investor Motivations and Allocation Strategies
    Investor Motivations and Allocation Strategies (CFA Level 1): Key Investor Motivations, Diversification, and Potential for Higher Returns. Key definitions, formulas, and exam tips.
  • Ethical and Professional Conduct in Alternatives
    Ethical and Professional Conduct in Alternatives (CFA Level 1): Relevance of the CFA Institute Code of Ethics, Common Ethical Dilemmas in Alternatives, and Conflicts of Interest. Key definitions, formulas, and exam tips.
  • Historical Evolution of the Alternative Investments Landscape
    Historical Evolution of the Alternative Investments Landscape (CFA Level 1): Origins of Alternative Investments, Emergence of Hedge Funds, and Growth of Private Equity: 1970s–1990s. Key definitions, formulas, and exam tips.
  • Tax and Jurisdictional Structures
    Tax and Jurisdictional Structures (CFA Level 1): Core Domiciles and Why They Matter, Pass-Through Structures and Tax Efficiency, and Withholding Taxes, Deferral Strategies, and Treaty Benefits. Key definitions, formulas, and exam tips.
  • Cross-Border Opportunities and Challenges
    Cross-Border Opportunities and Challenges (CFA Level 1): Global Landscape for Alternative Investments and Drivers of Globalization and Cross-Border Investment. Key definitions, formulas, and exam tips.
  • Volatility and Liquidity Characteristics across Segments
    Volatility and Liquidity Characteristics across Segments (CFA Level 1): Understanding Volatility Across Alternative Investments and Market Liquidity vs. Funding Liquidity. Key definitions, formulas, and exam tips.
  • Monetary Policy Impacts on Alternative Investments
    Monetary Policy Impacts on Alternative Investments (CFA Level 1): Monetary Policy Tools and Their Influence and Low-Interest-Rate Environments: The Search for Yield. Key definitions, formulas, and exam tips.
  • Role of Placement Agents and Consultants
    Role of Placement Agents and Consultants (CFA Level 1): Role of Placement Agents in the Capital Raising, Compensation Structures and Potential Conflicts, and Role of Consultants in Manager Selection. Key definitions, formulas, and exam tips.
  • Investor Psyche and Behavioral Traps in Alternative Investments
    Investor Psyche and Behavioral Traps in Alternative Investments (CFA Level 1): Understanding Behavioral Biases in Alternative Investments and Overconfidence and Familiarity Bias. Key definitions, formulas, and exam tips.
  • Measuring Industry Maturity and Market Depth
    Measuring Industry Maturity and Market Depth (CFA Level 1): Understanding the Evolution of Alternative Investment Markets, Lifecycle Stages and Key Indicators, and AUM Growth and Fund Count. Key definitions, formulas, and exam tips.

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