Chapter 1: Foundations of Alternative Investments

In this section

• Defining Alternative Investments and Market Overview
  Explore the broad landscape of alternative investments, key differentiators from traditional asset classes, the global market scope, and the drivers shaping demand for alternative strategies.
• Core Differences from Traditional Investments
  Explore key distinctions between traditional and alternative investments, including liquidity, fees, transparency, complexity, regulatory oversight, and performance measurement considerations.
• Structures, Methods, and Vehicles
  Discover the key structures, methods, and vehicles that form the backbone of alternative investments, including fund structures, roles of GPs and LPs, onshore/offshore considerations, leverage, and more.
• Regulatory Considerations and Key Market Participants
  Explore the key regulatory bodies, compliance requirements, and major participants shaping the alternative investments landscape.
• Industry Trends and Growth Drivers
  Explore historical growth rates, technological advancements, and evolving investor demands shaping the alternative investment industry.
• Comparative Asset Class Analysis
  Explore the risk-return profiles, correlations, and unique alpha drivers of various alternative investments, including private equity, hedge funds, real estate, commodities, infrastructure, and venture capital.
• Investor Motivations and Allocation Strategies
  Explore the key drivers behind allocating to alternative investments, along with portfolio construction principles, asset allocation approaches, and the governance responsibilities that shape investor decisions.
• Ethical and Professional Conduct in Alternatives
  Explore CFA Institute Code and Standards applications, ethical dilemmas, and best practices in Alternative Investments for robust investor protection and professional responsibility.
• Historical Evolution of the Alternative Investments Landscape
  Explore the origins and development of alternative investments, from early merchant banking to modern hedge funds, private equity, and real assets, highlighting the major milestones, regulatory shifts, and academic research that shaped the industry.
• Tax and Jurisdictional Structures
  Explore key tax considerations, pass-through entities, global fund domiciles, and compliance obligations that shape alternative investment strategies and returns.
• Cross-Border Opportunities and Challenges
  Explore how globalization opens doors for cross-border alternative investments, delving into foreign ownership barriers, risk considerations, accounting standards, and critical due diligence factors.
• Volatility and Liquidity Characteristics across Segments
  Learn how different alternative investment segments handle volatility and liquidity, exploring appraisal-based valuation, funding liquidity, gating mechanisms, side pockets, and more.
• Monetary Policy Impacts on Alternative Investments
  Explore how central bank actions and interest rates influence valuations, fundraising, and strategic decisions in the alternatives space, including effects on leveraged buyouts, real estate projects, and global investment opportunities.
• Role of Placement Agents and Consultants
  Exploring the essential contributions of placement agents and consultants in alternative investments, focusing on capital raising, due diligence, and transparent collaboration with institutional clients.
• Investor Psyche and Behavioral Traps in Alternative Investments
  Explore key behavioral biases such as overconfidence, herd mentality, and loss aversion in less-liquid markets, and discover practical techniques to mitigate emotional decision-making in alternative investments.
• Measuring Industry Maturity and Market Depth
  Learn how alternative investment markets progress from their early stages to maturity, how liquidity and secondary markets evolve, and what key indicators help investors gauge depth and resilience.