Alternative Investments: Study Session 18
Study Session Materials
Complete List of CFA Program Readings
Topic Overview
Alternative Investments
Due to diversification benefits and higher expectations of investment returns, investors are increasingly turning to alternative investments. This study session describes the common types of alternative investments, methods for their valuation, unique risks and opportunities associated with them, and the relation between alternative investments and traditional investments.
Although finding a single definition of an “alternative” investment is
difficult, certain features (e.g., limited liquidity, infrequent
valuations, and unique legal structures) are typically associated with
alternative investments. This study session discusses these features and
how to evaluate their impact on expected returns and investment decisions
in more detail. The reading provides an overview of the major categories
of alternative investments, including real estate, private equity,
venture capital, hedge funds, closely held companies, distressed
securities, and commodities.
Each one of these categories has several unique characteristics, and the
readings discuss valuation methods for illiquid assets (such as direct
real estate or closely held companies), performance measures for private
equity and venture capital investments, differences between various hedge
fund strategies, and implementation vehicles for investments in
alternative assets.
View learning outcome statements (LOS) for reading objectives.
Complete List of CFA Program Readings
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"Alternative Investments" Ch. 8, International Investments, 5th edition, Bruno Solnik and Dennis McLeavey (Addison Wesley, 2004) |
View LOS |