the state of alternative investments: a global view · credit suisse hedge fund index jpm global...
TRANSCRIPT
The State of Alternative
Investments: A Global View
Keith Black, PhD, CFA, CAIA
Showcase your Knowledge @CAIA_Keith Black@CAIAAssociation
State of Alternative Investment – 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 9,000 current charterholders in more than 90 countries
▪ 30 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 – 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 – 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 – 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
▪ Industry Credibility: Have your achievements recognized
and your currency elevated in the competitive and
complex alternative investment space;
▪ Specialized Curriculum: The CAIA Level II
exam curriculum is focused on the latest alternative
investment practices and strategies, providing essential
knowledge and skills;
▪ Continued Professional Development: Leverage your
already broad knowledge with specialized education in
the growing alternatives arena;
▪ Career Enhancement: Create pathways to better
positions through expanded knowledge and distinction.
Stackable Credential Pilot Program
Stacking the CAIA designation with your CFA charter offers you:
Eligibility + Application
▪ CFA charterholders in good standing who meet the following criteria are eligible:
▪ No prior CAIA exam history;
▪ Have acquired the CFA digital badge.
▪ Eligible applicants may enroll directly into Level II exam paying both enrollment & exam fee ($400 plus either $1150* or $1250)
▪ *Eligible for early discount, association partner discounts
▪ Candidates may test anywhere globally
MORE INFORMATION AND APPLICATIONCAIA.org/stackable-pilot
State of Alternative Investment – 8
Are US Equity Markets “STILL” Rich?
0
5
10
15
20
25
30
35
S&
P 5
00
P/E
Ra
tio
S&P 500 P/E Ratio
Source: CAIA and Bloomberg. Data through December 31, 2018.
State of Alternative Investment – 9
How About From This View?
Source: Courtesy of Robert Shiller from his book, Irrational Exuberance. Data through January 7, 2019
0
5
10
15
20
25
30
35
40
45
50
1/1
/19
62
9/1
/19
63
5/1
/19
65
1/1
/19
67
9/1
/19
68
5/1
/19
70
1/1
/19
72
9/1
/19
73
5/1
/19
75
1/1
/19
77
9/1
/19
78
5/1
/19
80
1/1
/19
82
9/1
/19
83
5/1
/19
85
1/1
/19
87
9/1
/19
88
5/1
/19
90
1/1
/19
92
9/1
/19
93
5/1
/19
95
1/1
/19
97
9/1
/19
98
5/1
/20
00
1/1
/20
02
9/1
/20
03
5/1
/20
05
1/1
/20
07
9/1
/20
08
5/1
/20
10
1/1
/20
12
9/1
/20
13
5/1
/20
15
1/1
/20
17
9/1
/20
18
Shiller PE Ratio for the S&P 500
State of Alternative Investment – 10
Fixed Income 30+ Year Bull Market
-2
0
2
4
6
8
10
12
14
16
18
Yie
ld
German Bund 10 Year US 10 Year
Source: CAIA and Bloomberg. Data through December 31, 2018
State of Alternative Investment – 11
Asset Class Performance
Source: CAIA and Bloomberg. Quarterly returns. Annualized volatility and max draw-down are from December 2006 – September 2018
Ending
Sept
2018
1 Yr 5 Yr 10 Yr Ann. Vol
Draw-
down
S&P 500 17.9% 13.9% 12.0% 15.2% -45.8%
Barclays US Aggregate -1.2% 2.2% 3.8% 3.3% -3.0%
US 60/40 10.0% 9.2% 9.0% 8.8% -27.4%
MSCI World 11.2% 9.3% 8.6% 16.4% -49.0%
Barclays Global Aggregate -1.3% 0.8% 2.9% 6.0% -7.2%
Global 60/40 6.1% 5.9% 6.6% 10.5% -30.9%
Bloomberg Commodities 2.6% -7.2% -6.2% 18.9% -65.9%
HFRI Fund Weighted Composite 4.0% 4.1% 4.6% 7.1% -19.0%
NCREIF Timberland 4.0% 6.0% 4.0% 4.5% -5.7%
NCREIF Farmland 6.8% 9.9% 11.6% 5.3% 0.0%
NCREIF Property 7.2% 9.6% 6.4% 5.4% -23.9%
Cambridge Associates US Private Equity 18.7% 13.5% 12.0% 8.7% -25.1%
Cambridge Associates US Venture Capital 19.7% 15.0% 11.0% 8.0% -18.4%
Global Invested Alternative Assets Portfolio 9.6% 9.1% 7.7% 6.6% -21.9%
US 40% Stocks/40% Bonds/20% Portfolio 8.4% 8.2% 8.1% 7.0% -21.9%
Global 40% Stocks/40% Bonds/20% Portfolio 5.8% 5.9% 6.4% 8.5% -25.1%
State of Alternative Investment – 12
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 7.9%
to 7.5%.
▪ Should projected returns
continue to decline,
investment return
assumptions are likely to
also to continue their
downward trend.
State of Alternative Investment – 13
Market Size of Investments
Source: 2016 Estimates from Aon Hewitt, HFR, Barclays, Preqin
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
State of Alternative Investment – 14
Participation In Alternatives
Source: Preqin Investor Outlook: Alternative Assets, H2 2018
State of Alternative Investment – 15
Institutional Investor Allocation
Source: Preqin Investor Outlook: Alternative Assets, H2 2018
State of Alternative Investment – 16
Alternative Investment Allocations
▪ The largest endowments have average allocations of: ▪ 13% US equity, 19% non-US equity, 11% in fixed income and cash
▪ 24% hedge funds, 19% PE/VC, 14% real assets
Source: NACUBO-Commonfund Study of Endowments, 2017
0%
5%
10%
15%
20%
25%
30%
Real Estate Hedge Funds Private Equity + Venture
Capital
Natural Resources
2002 2004 2006 2008 2010 2012 2014 2016 2017
State of Alternative Investment – 17
Average SWF Asset Allocation
Source: “How do Sovereign Wealth Funds Invest? Shift into Private Markets Continues,” E. Hentov, State Street Global Advisors, January 2018
48.544.6
33.5 35.8 32.8
35.339
41 38.638.5
16.2 16.5
25.4 25.6 28.7
0
10
20
30
40
50
60
70
80
90
100
2002 2007 2012 2014 2016
Cash and Fixed Income Equities Private Markets
State of Alternative Investment – 18
Avg. Asset Allocation by Investor Type
Source: Preqin 2016
5.4%
11.0%
7.9%
2.5%
5.8%
8.3%
9.0%
3.2%
6.3% 6.2%
7.4%
N/A
11.0%
19.0%
6.0%
3.5%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
Private Equity Hedge Funds Real Estate Infrastructure
Private Pensions Public Pensions Sovereign Wealth Funds Endowments and Foundations
State of Alternative Investment – 19
Energy
63%
Grains,
Meats, Softs
22%
Precious
Metals
4%
Industrial
Metals
11%
S&P GSCI Commodity Index,
2019 Target Weights
Commodity Futures Indices
Energy
30%
Grains,
Meats, Softs
36%
Precious
Metals
16%
Industrial
Metals
18%
Bloomberg Commodity Index,
2019 Target Weights
State of Alternative Investment – 20
Performance in the Worst of Times
-7.0%
-6.0%
-5.0%
-4.0%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
S&P 500 MSCI World Index S&P GSCI Bloomberg
Commodity
Credit Suisse Hedge
Fund Index
JPM Global
Aggregate Bond
Credit Suisse
Managed Futures
Barclays Capital U.S.
Aggregate Bond
Average Index Performance During the Largest Monthly S&P 500 Decline
Each Year From Jan. 1994 to Dec. 2018
Source: CAIA and Bloomberg
State of Alternative Investment – 21
Trends in Correlation
(0.40)
(0.20)
0.00
0.20
0.40
0.60
0.80
1.00
1/1
/199
4
3/1
/199
5
5/1
/199
6
7/1
/199
7
9/1
/199
8
11
/1/1
999
1/1
/200
1
3/1
/200
2
5/1
/200
3
7/1
/200
4
9/1
/200
5
11
/1/2
006
1/1
/200
8
3/1
/200
9
5/1
/201
0
7/1
/201
1
9/1
/201
2
11
/1/2
013
1/1
/201
5
3/1
/201
6
5/1
/201
7
7/1
/201
8
Bloomberg Commodity Index
vs. S&P 500 Index
3-Year Rolling Correlation
Source: CAIA and Bloomberg. Data through December 2018
(0.20)
0.00
0.20
0.40
0.60
0.80
1.00
1/1
/199
4
3/1
/199
5
5/1
/199
6
7/1
/199
7
9/1
/199
8
11
/1/1
999
1/1
/200
1
3/1
/200
2
5/1
/200
3
7/1
/200
4
9/1
/200
5
11
/1/2
006
1/1
/200
8
3/1
/200
9
5/1
/201
0
7/1
/201
1
9/1
/201
2
11
/1/2
013
1/1
/201
5
3/1
/201
6
5/1
/201
7
7/1
/201
8
Bloomberg Commodity Index
vs. Sub-Indices
3-Year Rolling Correlation
Precious Metals Industrial Metals Agriculture Energy
State of Alternative Investment – 22
Potential Demand: Rebalancing from Equities
▪ Commodity prices have declined while equity markets have risen sharply
Source: Bloomberg & CAIA
State of Alternative Investment – 23
Key Issues Hedge Funds in 2018
Source: Preqin Investor Outlook: Alternative Assets, H2 2018
69%
56%
41%
39%
31%
24%
20%
19%
11%
11%
Performance
Fees
Ongoing Volatility
in Global Markets
Public Perception
of Industry
Regulation
Notable Investors
Exiting the Asset Class
Transparency
Portfolio Management
Pricing/Valuations
Governance
Pro
po
rtio
n o
f R
esp
on
de
nts
State of Alternative Investment – 24
Estimated Hedge Fund AUM Growth
$3,244.3
($500)
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD
Q3
2018
Estimated Assets Estimated Asset Flow
Source: HFR® Global Hedge Fund Industry Report – Third Quarter 2018 | Copyright 2018. All rights reserved. | www.HedgeFundResearch.com
State of Alternative Investment – 25
Estimated Alternative UCITS AUM Growth
Source: LuxHedge Alternative UCITS database. Data as of August 31, 2018
0 €
50 €
100 €
150 €
200 €
250 €
300 €
350 €
400 €
450 €
500 €
AU
M (
Mio
Eu
r)
State of Alternative Investment – 26
Liquid Alternative Market Growth
Source: CAIA and Morningstar
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
$500
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Real estate-linked Nontraditional bond Bear Market Commodity Currency
Equity Market Neutral Long/Short Equity Managed Futures Multialternative
State of Alternative Investment – 27
Estimated Number of Funds: HF vs. FoF
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD
Q3
2018
FoF HF
Source: HFR® Global Hedge Fund Industry Report – Third Quarter 2018 | Copyright 2018. All rights reserved. | www.HedgeFundResearch.com
State of Alternative Investment – 28
Funds with Inflows vs. Outflows
Outflows
53.05%
Inflows
46.95%
Single-Manager Funds
Outflows
67.57%
Inflows
32.43%
Fund of Funds
Source: HFR® Global Hedge Fund Industry Report – Third Quarter 2018 | Copyright 2018. All rights reserved. | www.HedgeFundResearch.com
State of Alternative Investment – 29
Distribution of Industry Assets: Firm AUM Tier
46.08%
14.74%
11.37%
7.89%
13.96%
5.96%
By # of Firms
< $100 Million $100 to $250 Million $250 to $500 Million
$500M to $1 Billion $1to $5 Billion > $5 Billion
1.09%1.76% 2.98%
4.12%
24.63%
65.42%
By Firm AUM Size
< $100 Million $100 to $250 Million $250 to $500 Million
$500M to $1 Billion $1to $5 Billion > $5 Billion
Source: HFR® Global Hedge Fund Industry Report – Third Quarter 2018 | Copyright 2018. All rights reserved. | www.HedgeFundResearch.com
State of Alternative Investment – 30
Hedge Fund Fee Structures Sought by Investors
Source: Preqin
29%
31%
37%
48%
55%
0% 10% 20% 30% 40% 50% 60%
Clawback
1 or 30 Fee Structure
Tiered Fee Levels
High-Water Mark
Hurdle Rate
Propostion of Respondents
State of Alternative Investment – 31
Rising Sector Dispersion
Source: CAIA and Bloomberg. Data through January 3, 2019
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
Gro
wth
of
$1
with
th
e S
&P
50
0 T
R
Co
rre
lati
on
3 Year Rolling Correlation with S&P 500 Index
0.91 - Technology
0.9 - Industrials
0.91 - Consumer Discretionary
0.83 - Financials
0.83 - Materials
0.83 - Health Care
0.75 - Average
0.64 - Consumer Staples
0.68 - Energy
0.25 - Utilities
2.12 - Growth $1 of SPX
State of Alternative Investment – 32
Private Capital AUM by Asset Class
Source: Preqin Online Products
700 736 750851
941
1,212
1,668
2,231 2,2522,449
2,748
3,020
3,265
3,7723,908
4,217
4,540
5,216
5,826
0
1,000
2,000
3,000
4,000
5,000
6,000
Ass
ets
un
de
r M
an
ag
em
en
t ($
bn
)
Private Equity Private Debt Real Estate Infrastructure Natural Resources
State of Alternative Investment – 33
Private Capital Dry Powder by Asset Class
Source: Preqin Online Products
$292$369 $397 $395 $399
$551
$788
$992$1,065 $1,055
$983 $1,000$943
$1,226 $1,222
$1,362
$1,507
$1,779
$2,099
-200
300
800
1,300
1,800
2,300
Dry
Po
wd
er ($
bn
)
Private Equity Real Estate Infrastructure Private Debt Natural Resources Total
State of Alternative Investment – 34
Private Equity Assets Under Management
Source: Preqin Private Equity Online
577 589 593657
707
880
1,153
1,467 1,420
1,572
1,7201,792
1,936
2,1772,227
2,368
2,560
3,060
3,411
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Ass
ets
un
de
r M
an
ag
em
en
t ($
bn
)
Dry Powder ($bn) Unrealized Value ($bn)
State of Alternative Investment – 35
Private Equity Dry Powder by Fund Type
Source: Preqin Private Equity Online
$292
$369$397 $395 $397
$549
$785
$983$1,048 $1,043
$967 $982$920
$1,168 $1,170
$1,302
$1,443
$1,700
$1,901 $1,903
0
500
1000
1500
2000
Dry
Po
wd
er ($
bn
)
Buyout Distressed PE Growth Mezzanine Other Real Estate Venture
State of Alternative Investment – 36
Annual Capital Called up and Distributed by
Private Equity Funds
Source: Preqin Private Equity Online
-200
-100
0
100
200
300
400
500
600
Capital Called up ($bn) Capital Distributed ($bn) Net Cash Flow ($bn)
State of Alternative Investment – 37
Venture Capital Public Market Equivalent
Source: Preqin Online Products . As of June 30, 2018
0.60
0.70
0.80
0.90
1.00
1.10
1.20
1.30
1.40
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
PM
E V
alu
e (
X)
Vintage Year
KS PME Using Russell 2000 TR (X)
If PME index value (X) is >1, private equity has outperformed the public market
State of Alternative Investment – 38
Venture Capital Deals* Completed Globally
Source: Preqin Online Products
*Figures exclude add-ons, grants, mergers, secondary stock purchases and venture debt.
11 1112 11
13 1312 13
89 9
12 1113
10
13
1618
1614
13
16 1614
12
15 1517
20
28
24
3134
4445
32
4446
36
31
35
50
53 54 53
75
70
76
0
10
20
30
40
50
60
70
80
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
20
07 Q
1
20
07 Q
2
20
07 Q
3
20
07 Q
4
20
08 Q
1
20
08 Q
2
20
08 Q
3
20
08 Q
4
20
09 Q
1
20
09 Q
2
20
09 Q
3
20
09 Q
4
20
10 Q
1
20
10 Q
2
20
10 Q
3
20
10 Q
4
20
11 Q
1
20
11 Q
2
20
11 Q
3
20
11 Q
4
20
12 Q
1
20
12 Q
2
20
12 Q
3
20
12 Q
4
20
13 Q
1
20
13 Q
2
20
13 Q
3
20
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4
20
14 Q
1
20
14 Q
2
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3
20
14 Q
4
20
15 Q
1
20
15 Q
2
20
15 Q
3
20
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4
20
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1
20
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2
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3
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4
20
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1
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2
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3
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1
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2
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3
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4
Ag
gre
ga
te D
ea
l Va
lue
($
bn
)
No
. o
f D
ea
ls
No. of Deals Aggregate Deal Value ($bn)
State of Alternative Investment – 39
Number of Venture Capital Deals* by Region
Source: Preqin Private Equity Online.
*Figures exclude add-ons, grants, mergers, secondary stock purchases and venture debt.
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,50020
07 Q
1
20
07 Q
2
20
07 Q
3
20
07 Q
4
20
08 Q
1
20
08 Q
2
20
08 Q
3
20
08 Q
4
20
09 Q
1
20
09 Q
2
20
09 Q
3
20
09 Q
4
20
10 Q
1
20
10 Q
2
20
10 Q
3
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10 Q
4
20
11 Q
1
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11 Q
2
20
11 Q
3
20
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4
20
12 Q
1
20
12 Q
2
20
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3
20
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4
20
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1
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13 Q
2
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3
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13 Q
4
20
14 Q
1
20
14 Q
2
20
14 Q
3
20
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4
20
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1
20
15 Q
2
20
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3
20
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4
20
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1
20
16 Q
2
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3
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4
20
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1
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2
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3
20
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4
20
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1
20
18 Q
2
20
18 Q
3
20
18 Q
4
No
. o
f D
ea
ls
North America Europe Asia ROW
State of Alternative Investment – 40
Aggregate Value of Venture Capital Deals*
by Region
Source: Preqin Private Equity Online.
*Figures exclude add-ons, grants, mergers, secondary stock purchases and venture debt.
0
10
20
30
40
50
60
70
80
20
07 Q
1
20
07 Q
2
20
07 Q
3
20
07 Q
4
20
08 Q
1
20
08 Q
2
20
08 Q
3
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4
20
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1
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2
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3
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4
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1
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2
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3
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4
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1
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2
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3
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4
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1
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2
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3
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4
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1
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3
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4
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1
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2
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3
20
14 Q
4
20
15 Q
1
20
15 Q
2
20
15 Q
3
20
15 Q
4
20
16 Q
1
20
16 Q
2
20
16 Q
3
20
16 Q
4
20
17 Q
1
20
17 Q
2
20
17 Q
3
20
17 Q
4
20
18 Q
1
20
18 Q
2
20
18 Q
3
20
18 Q
4
Va
lue
of
De
als
$b
n
North America Europe Asia ROW
State of Alternative Investment – 41
Unlisted Natural Resources Dry Powder by
Primary Strategy
Source: Preqin Natural Resources Online
1 2 3 2 3 3 5 6 9 8 10 87 9 6 8 7 8 5 911 11 11 10
40
63 73 70 7078
91
111
123135
163
152
1
22 1 2
2
4
8
7
5
6
6
0
12 2 3
4
4
5
4
5
5
4
0
0
0 0 0
1
0
1
0
1
1
1
0
50
100
150
200
250
Water
Timberland
Metals & Mining
Energy
Diversified
Natural Resources
Agriculture/
Farmland
State of Alternative Investment – 42
Unlisted Natural Resources Funds in Market by
Primary Geographic Focus
Source: Preqin Natural Resources Online. As of January 2018
112
54
17
58
67
27
9
22
0
20
40
60
80
100
120
North America Europe Asia Rest of World
No. of Funds Raising Aggregate Capital Targeted ($bn)
State of Alternative Investment – 43
Natural Resources
Source: Preqin Online Products
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Agriculture/
Farmland
Conventional
Energy
Renewable
Energy
Metals &
Mining
Timberland Water
Sectors that Investors View as Presenting the Best Opportunities, 2016 vs.
2017
12/1/2016 12/1/2017
State of Alternative Investment – 44
Private Debt Assets under Management
Source: Preqin
0
100
200
300
400
500
600
700
800
Ass
ets
Un
de
r M
an
ag
em
en
t ($
bn
)
Dry Powder ($bn) Unrealized Value ($bn)
17x Growth Over 18 Years
State of Alternative Investment – 45
Private Debt AUM by Fund Type
Source: Preqin, June 2017
0
50
100
150
200
250
Direct Lending Distressed Debt Mezzanine Special Situations Venture Debt
Dry Powder ($bn) Unrealized Value ($bn)
State of Alternative Investment – 46
Private Debt Geographic Focus
Source: Preqin
178
82
31
44
88
42
11 8
0
20
40
60
80
100
120
140
160
180
200
North America Europe Asia Rest of World
Private Debt Funds in Market by Primary
Geographic Focus (As of January 2018)
No. of Funds Raising Aggregate Capital Targeted ($bn)
62%58% 57%
26%
25% 24%
6%9% 11%
6% 8% 8%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Jan-16 Jan-17 Jan-18
Make-up of Investors in Private Debt
by Location
North America Europe Asia Rest of World
State of Alternative Investment – 47
Key Challenges Facing Unlisted Infrastructure
Managers in 2018
Source: Preqin Fund Manager Survey, November 2017
19%
19%
20%
20%
20%
23%
33%
36%
59%
0% 10% 20% 30% 40% 50% 60% 70%
Fulfilling Investor Demand
Volatility/Uncertainty in Global Markets
Fundraising
Interest Rates
Performance
Fee Pressure
Deal Flow
Regulation
Valuations
Proportion of Respondents
State of Alternative Investment – 48
Unlisted Infrastructure AUM
Source: Preqin Online Products
$7 $7 $7 $8$17 $24
$54
$101$118
$129
$167
$211$222
$272$292
$318
$379
$451
$496
0
100
200
300
400
500
600
Ass
ets
un
de
r M
an
ag
em
en
t ($
bn
)
Dry Powder ($bn) Unrealized Value ($bn) Total
State of Alternative Investment – 49
Investor Preference
Source: Preqin Investor Interviews, December 2017
13%
18%
28%
37%
44%
46%
49%
0% 10% 20% 30% 40% 50% 60%
Social
Waste Management
Telecommunications
Utilities
Transport
Renewable Energy
Energy (Excl. Renewables)
Proportion of Respondents
Sectors that Investors View as Presenting the Best Opportunities
9%
12%
14%
28%
36%
36%
47%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
Secondaries
Debt
Fund of Funds
Value Added
Core-Plus
Opportunistic
Core
Proportion of Respondents
Strategies that Investors View as Presenting the Best Opportunities
State of Alternative Investment – 50
Open-Ended Infrastructure Fund Launches
Source: Preqin Infrastructure Online
0
10
20
30
40
50
60
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
No. of Funds Already in Market No. of Funds Launched No. of Funds Liquidated
State of Alternative Investment – 51
Key Challenges Facing Private Real Estate
Managers in 2018
Source: Preqin Fund Manager Survey, November 2017
10%
11%
15%
16%
19%
19%
24%
24%
33%
37%
62%
0% 10% 20% 30% 40% 50% 60% 70%
Fee Pressure
Fulfilling Investor Demands
Availability/Pricing of Debt Financing
Regulation
Fundraising
Exit Environment
Volatility/Uncertainty in Global Markets
Performance
Interest Rates
Deal Flow
Valuations
Proportion of Respondents
State of Alternative Investment – 52
Performance: PrEQin Index by Asset Class
Source: Preqin Real Estate Online
0
50
100
150
200
25012
/1/2
007
3/1
/200
8
6/1
/200
8
9/1
/200
8
12
/1/2
008
3/1
/200
9
6/1
/200
9
9/1
/200
9
12
/1/2
009
3/1
/201
0
6/1
/201
0
9/1
/201
0
12
/1/2
010
3/1
/201
1
6/1
/201
1
9/1
/201
1
12
/1/2
011
3/1
/201
2
6/1
/201
2
9/1
/201
2
12
/1/2
012
3/1
/201
3
6/1
/201
3
9/1
/201
3
12
/1/2
013
3/1
/201
4
6/1
/201
4
9/1
/201
4
12
/1/2
014
3/1
/201
5
6/1
/201
5
9/1
/201
5
12
/1/2
015
3/1
/201
6
6/1
/201
6
9/1
/201
6
12
/1/2
016
3/1
/201
7
6/1
/201
7
Ind
ex R
etu
rn
(Re
ba
sed
to
100 a
s o
f 3
1-D
ec
-2007
PrEQIn Real Estate PrEQIn Private Equity PrEQIn Infrastructure PrEQIn Private Debt MSCI US REIT
State of Alternative Investment – 53
0.6
0.7
0.8
0.9
1
1.1
1.2
1.3
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
PM
E V
alu
e (
X)
KS PME Using MSCI US REIT KS PME Using S&P 500 TR
Real Estate: Public Market Equivalent (PME)
Source: Preqin Real Estate Online, All Regions. As of June 30, 2018
If PME value (X) is >1, private real estate has outperformed the public market
State of Alternative Investment – 54
US Average Cap Rate vs. US 10 Year Yield
Source: CAIA and Bloomberg. Data through November 2018
0
2
4
6
8
10
12
1/1/2001 1/1/2003 1/1/2005 1/1/2007 1/1/2009 1/1/2011 1/1/2013 1/1/2015 1/1/2017
Yie
ld
Spread US Avg. Cap Rate US 10 Year Yield
Global Cap Rates: 3Q 2017
Europe
Office Retail Industrial
Low High QoQ Low High QoQ Low High QoQ
Berlin 3% 5% Down 3.2% 4% Down 4.7% 6.0% Down
Frankfurt 3.80% 8.40% Down 3% 4% Down 4.70% 4.7% Down
London 4% 4.5% Up 2.0% 4.0% Up 4% 5% -
Munich 3.0% 5% - 3% 6% Down 4% 6.5% Down
Paris 3.00% 3.50% Down 3.00% 4.00% 5.50% 6.50% Up
APAC
Office Retail Industrial
Low High QoQ Low High QoQ Low High QoQ
Hong Kong 3% 4% Down 2.5% 4% 3.5% 4.5% -
Shanghai 3.50% 4.50% Down 4% 6% Down 5.75% 6.8% Down
Singapore 4% 4.0% - 4.5% 5.0% 6% 7% -
Sydney 4.8% 5% Down 4% 6% 5% 6.5% -
Tokyo 3.50% 4.50% - 4.00% 5.00% 4.00% 5.50% Down
Americas
Office Retail Industrial
Low High QoQ Low High QoQ Low High QoQ
Chicago 4% 6% Down 4.5% 7% - 4.5% 6.5% -
Los Angeles 4.25% 7.75% Up 4% 7% Up 3.75% 6.5% Up
New York 3% 4.5% - 3.5% 5.5% - 3% 7% -
San Francisco 3.5% 7% - 3% 6% - 4% 6.5% Down
Toronto 3.75% 4.75% - 4.25% 5.25% - 4.75% 5.25% Down
Source: Global Cap Rate Report | Q3 2017 | Valuation and Advisory Services | Colliers International. Cap Rates are gross yields for Class A assets in prime
locations in their class in the respective locations based on survey results from professional valuers / appraisers.
State of Alternative Investment – 56
Closed-End Private Real Estate AUM
Source: Preqin Real Estate Online
20 36 38 38 5395
129165 168 176 149 160 134
200 194228 237
281323
4342 39 58
68
91
143
241 228 215296
391 452
501550
573 542
532
586
0
100
200
300
400
500
600
700
800
900
1000
Ass
ets
un
de
r M
an
ag
em
en
t ($
bn
)
Dry Powder ($bn) Unrealized Value ($bn)
State of Alternative Investment – 57
Closed-End Private Real Estate Dry Powder by
Strategy
Source: Preqin Real Estate Online
0
20
40
60
80
100
120
Value Added Opportunistic Core-Plus Debt Core Distressed
State of Alternative Investment – 58
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 – 59
U.S. CMBS Issuance By Year
Source: CRE Finance Council
48
66
54
78
94
168
203
230
12
311
30
44
80
9095
68
87
53
0
50
100
150
200
250
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Bill
ion
s
State of Alternative Investment – 60
Historical U.S. CLO Issuance
Source: The Royal Bank of Scotland, Fitch Ratings, and LCD, and offering of S&P Global Market Intelligence. Data thru December 7, 2018
1.74.5
9.914.2 15.8
13.8 15.4 15.1
27.6
46.3
79.8
92.6
19
0.33.3
12.9
51.9
80.2
116.2
93.1
63.5
118
125
0
20
40
60
80
100
120
140
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
$, B
il
March 2019 Exam
The Global Benchmark In Alternative
Investment Education
The CAIA Charter
Global Presence
Member Asset Class Focus and Regional Distribution
Data: CAIA Member Survey
Hedge Funds 54%
Private Equity 46%
Fixed Income Alternatives 44%
Real Estate 41%
Commodities 32%
Real Assets Infrastructure, Farmland, Timberland 30%
Structured Products 29%
Managed Futures 25%
Venture Capital 23%
0 18 35 53 70
55%
13%
32%Americas
Asia-Pacific
Europe, Middle-East, Africa
CAIA Members work across a variety of asset classes globally.
Membership Growth
*2018 Data through May 2018
561
3,265
5,700
9,000
0
2,000
4,000
6,000
8,000
10,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
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
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
Current & Integrated
Topics Available
Free at
caia.org
Level I TopicApproximate 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%
Level I 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%
Level II Exam Topics
Examination Format and Scheduling
Level I
Section 1: 100 questions / 120 minutes
Section 2: 100 questions / 120 minutes
Both CAIA exams are administered
internationally in computerized format
exclusively at proctored Pearson VUE
test centers.
Level II
Section 1: 100 questions / 120 minutes
Section 2: 3 essays / 120 minutes
Once you have purchased your Level I or
Level II exam, you will receive a
confirmation email with a link that will
allow you to schedule your exam
appointment.
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Candidate Support & Tools
Visit CAIA.org/preparing
Fees (in USD) Level I Level II Annual Membership (in USD)
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TOTAL $1,650 $1,250 Retired $175
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Textbook & readings $125 $125
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Fees
Pass Rates
67% 66% 66%
59%61%
63%60%
64%66%68% 67%
70%66%
59%57% 58%
0%
20%
40%
60%
80%
100%
Level I
Level II
CAIA Charter
Academic Partnerships – Americas (partial list)
A complete list of CAIA’s academic partners globally can be found at caia.org.
Academic Partnerships – EMEA (partial list)
Academic Partnerships – APAC (partial list)
A complete list of CAIA’s academic partners globally can be found at caia.org.
Association Partnerships
Banks Consultants Fund Managers RegulatorsPension Funds &
Endowments
HSBC
Citi
Credit Suisse
UBS
Barclays Capital
Deutsche Bank
CambridgeAssociates
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Mercer
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Morgan Stanley
State Street
U.S. SEC
MAS Singapore
SFC Hong Kong
FCA UK
CIMA Cayman
APG
Teacher RetirementSystem of Texas
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Harvard Management Co.
Sample Employers
Top companies seek to hire CAIA Charterholders.Sample job postings from the CAIA Career Center
International Relationship Manager. CFA, CAIA or working toward preferred.
Equity Investment Research -Manager. CIMA, CAIA, and/or CFA charter holders or candidates will be looked favorably upon.
International Trading ManagerMBA, CFA, CAIA or CMT preferred
CAIA is Preferred
Senior Quantitative Research Analyst. CFA, CAIA, CIMA
Senior Credit SpecialistCFA / CAIA / FRM / PRM is considered highly advantageous.
Risk Management - AssociateIndustry certifications, such as a CFA, CAIA, or FRM, are a plus.
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Member Benefits
Early
Registration
Oct 1 – Nov 12, 2018
Regular
Registration
Nov 13 – Feb 4, 2019
Level I Exam
Feb 25 – Mar 8, 2019
Level II Exam
Mar 11 – 22, 2019
OCT NOV DEC JAN FEB MAR
Exams March 2019 – Notable Dates
AMERICAS
Millissa Allen, CAIAAmherstManaging Director of Business Developmentdirect: +1 413 549 [email protected]
Cody DurantAmherst
Assistant Director of Business Developmentdirect: +1 413 549 3313 [email protected]
EUROPE, MIDDLE-EAST, AFRICA
Laura Merlini, CAIAGenevaManaging Director of Business Developmentdirect: +41 796 154 [email protected]
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ASIA-PACIFIC
Joanne MurphyHong KongManaging Director, APACdirect: +852 3752 [email protected]
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Director, CAIA Foundationdirect: +65 6536 4241 [email protected]
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Global Business Development Contacts
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