Chapter 13: Alternative Investments in Portfolio Context

In this section

• Integrating Hedge Funds, Private Equity, and Real Assets
  Integrating Hedge Funds, Private Equity, and Real Assets (CFA Level 1): Big Picture of Alternative Investments, Understanding the Role of Alternatives in Portfolios, and Examining Hedge Funds. Key definitions, formulas, and exam tips.
• Illiquidity, Lockup Periods, and Portfolio Planning
  Illiquidity, Lockup Periods, and Portfolio Planning (CFA Level 1): Risk–Return Trade-Off of Illiquid Investments and Role of Lockup Periods in Alternative Funds. Key definitions, formulas, and exam tips.
• Diversification and Correlation Considerations
  Diversification and Correlation Considerations (CFA Level 1): Recap of Correlation Basics, Why Alternative Investments?, and Short-Term vs. Long-Term Correlation Structures. Key definitions, formulas, and exam tips.
• Risk and Return Profiles of Alternative Investments
  Risk and Return Profiles of Alternative Investments (CFA Level 1): Hedge Funds: Diverse Strategies and Absolute Return Orientation and Key Return Drivers. Key definitions, formulas, and exam tips.
• Due Diligence and Operational Considerations
  Due Diligence and Operational Considerations (CFA Level 1): Rationale for Due Diligence, Preliminary Background Checks and Manager Evaluation, and Manager Track Record and Strategy Consistency. Key definitions, formulas, and exam tips.
• Valuation Challenges for Alternatives
  Valuation Challenges for Alternatives (CFA Level 1): Why Valuation Is So Challenging in Alternatives, Common Valuation Methods, and Discounted Cash Flow (DCF) Analysis. Key definitions, formulas, and exam tips.
• Hedge Fund Replication Strategies
  Hedge Fund Replication Strategies (CFA Level 1): Key Motivations for Replication and Factor-Based Replication Approaches. Key definitions, formulas, and exam tips.
• Real Estate Investment Structures
  Real Estate Investment Structures (CFA Level 1): Direct vs. Indirect Real Estate Investments, Direct Ownership, and Indirect Ownership. Key definitions, formulas, and exam tips.
• Natural Resources and Commodity Funds
  Natural Resources and Commodity Funds (CFA Level 1): Rationale for Commodity and Natural Resource Investments, Physical vs. Commodity Futures, and Physical Asset Ownership. Key definitions, formulas, and exam tips.
• Infrastructure Investment Approaches
  Infrastructure Investment Approaches (CFA Level 1): Nature and Role of Infrastructure Assets, Stable and Regulated Cash Flow Potential, and Greenfield vs. Brownfield Infrastructure. Key definitions, formulas, and exam tips.
• Secondary Markets for Private Equity Interests
  Secondary Markets for Private Equity Interests (CFA Level 1): Rise of Secondary Markets, Motivations for Buyers and Sellers, and Sellers’ Perspective. Key definitions, formulas, and exam tips.
• Return Dispersion and Benchmarking in Alternatives
  Return Dispersion and Benchmarking in Alternatives (CFA Level 1): Why Return Dispersion Is So High, Challenges in Benchmarking, and Commonly Used Indices. Key definitions, formulas, and exam tips.
• Role of Alternatives in ESG and Impact Investing
  Role of Alternatives in ESG and Impact Investing (CFA Level 1): ESG Integration in Alternative Investments, ESG Tools and Methodologies, and Impact Investing and Private Equity. Key definitions, formulas, and exam tips.
• Evaluating Opportunistic Investments
  Evaluating Opportunistic Investments (CFA Level 1): Understanding Opportunistic Investments, Identifying Sources of Opportunity, and Distressed Debt and Its Appeal. Key definitions, formulas, and exam tips.
• Co-Investments and Direct Investments
  Co-Investments and Direct Investments (CFA Level 1): Co-Investments: The Basics, How Co-Investment Deals Typically Arise, and Key Advantages of Co-Investments. Key definitions, formulas, and exam tips.
• Combining Traditional and Alternative Strategies
  Combining Traditional and Alternative Strategies (CFA Level 1): Strategic Asset Allocation with Alternatives, Proportioning the Mix, and Factor-Based Integration. Key definitions, formulas, and exam tips.