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Level III Specialized Pathways

For 2025 Level III exams, we will introduce specialized pathways – two new versions of Level III in Private Wealth and Private Markets – while also keeping our traditional Portfolio Management path. Candidates will be able to select a path that teaches content more directly related to their interests and aspirations. The three versions will have a 'common core' of curriculum at Level III, supplemented by specialized content for each pathway.

  • up and down line graph icon Portfolio Management

    Constructing, managing, optimizing, and measuring portfolios of public market equity, fixed income, and derivative securities.

  • bridge icon Private Markets

    General Partner (GP) perspective of private markets investing. Runs through all key steps in the workflow from deal-sourcing and diligence to exit and builds on key valuation and other competencies in the CFA Program from all four asset class domains.

  • four point star icon Private Wealth

    Global perspective on and principles for serving High Net Worth clients (worth US$5M+). Structured as an arc from a young adult being onboarded to generating wealth through wealth transfer.

How are Level III Specialized Pathways Structured?

Candidates will choose one of three "specialized pathway" options at registration. Upon registration, the study materials provided will relate to the selected Pathway. Pathways can not be changed once registration is completed.

65-70% of the Level III exam topic weight will relate to the "Common Core" while the remaining 30-35% will relate to the selected Pathway. Questions related to the selected pathway will be a mix of item-set and essay just as for the common core.

There will be a single, mandatory 10-15 hour Practical Skills Module for Level III starting in this same window. It will focus on Portfolio Construction and more details will be forthcoming. This will not be graded although completion will need to be documented.

There will be no difference in the CFA Charter granted upon passing Level III. 

What stays the same?

Common core provides the knowledge, skills and ability about investment management which transcend the three pathways workflows. It will cover:

  • "Asset allocation." Capital market expectations, macro forecasting, handling constraints.
  • "Portfolio construction." Equity, Fixed Income and Alternatives portfolio construction, Institutional versus private wealth portfolio construction, trading costs.
  • "Performance measurement." Performance attribution, manager selection, Global Investment Performance Standards.
  • "Derivatives & risk management." Options strategies, swaps/forwards/futures strategies, currency hedging strategies.
  • "Ethics." Code of ethics, standards of professional conduct, Asset Manager Code.

What is included in the Private Wealth pathway content? 

Offers a global perspective on and universal principles for serving High Net Worth clients (worth US$5M+). It is structured as an arc from a young adult being onboarded and generating wealth to a private wealth manager to wealth transfer from the client. It builds on former versions of the CFA Program extending beyond simple investment management and financial planning to cover brand new areas such as family management, philanthropy and serving star athletes.
It is broken down into seven chapters:

  1. “The Private Wealth management industry”. Various types of business models in the WM industry, different fee and compensation structures, quarterbacking the constellation of advisors to the wealthy and regulation/compliance considerations for wealth managers.
  2. “Working with the wealthy”. Family and human dynamics and the social and psychological influences of wealth i.e. who you are dealing with across the tiers, complex family structures and family governance, necessary skills to find, serve and educate the wealthy, unique characteristics of ultra-high net-worths, approaches to develop a framework for family decision-making.
  3. “Wealth planning”. Formulating goals-based financial plans, methods to manage financial exposures through life and protect assets, evaluation of how taxes influence plans for individuals, and formulating liquidity strategies.
  4. “Investment planning”. Recommending portfolio allocations and investments for a private client, tax efficiency and tax management strategies to maximize post-tax return, approaches to retirement saving/planning and annuities and performance measurement and attribution to evaluate success through reporting.
  5. “Preserving the wealth”. Types of risk to human capital and strategies to mitigate and manage those risks through products such as insurance, plans and strategies to mitigate inflation corrosion, and plans and strategies to mitigate exchange rate volatility risk.
  6. “Advising the wealthy”. Citizenship, nationality, visas and legal residency approaches, maximizing net worth in complex family situations including double-taxation, maximizing human capital, financial capital and net worth for entrepreneurs, business owners, professionals, executives, and athletes, and managing concentrated asset positions in large privately-owned businesses.
  7. “Transferring the wealth”. Use of gifts to transfer wealth during lifetime, use of bequests and inheritance to transfer wealth at death and wealth management approaches to charitable giving and philanthropy.

What is included in the Private Markets pathway content? 

Addresses private markets investing primarily from the perspective of the General Partner (GP). It builds on key valuation and other competencies in the CFA Program from all four asset class domains. It is peppered with engaging recent examples from the private markets and private credit boom such as Elon Musk’s acquisition of Twitter, Facebook’s acquisition of WhatsApp, Blackstone REIT, events at Silicon Valley Bank, Gabon’s debt-for-nature swap and several high profile LBOs such as Thyssen elevators in 2020.

It is broken down into seven chapters:

  1. “Private investments and structures.” Features of private and public investments and markets, private investment methods and structures including equity debt real estate and infrastructure, types of and difference between performance metrics, comparison of risk and return profile to public markets as part of strategic asset allocation.
  2. “GP and LP perspective and the investment process.” General Partners and Limited Partners roles, responsibilities and interactions in managing private investment funds and difference from public fund managers, alignment of interests between private investment firms and their investors including fee structures, calculation and interpretation of private market fund performance from an investor perspective including fees and carried interest, favorable characteristics of private investment targets and sources of value creation, due diligence and business planning in private investment process, alternative exit routes and impact on value.
  3. “Private equity.” Private equity strategies over the company life cycle, characteristics of venture capital and growth equity investments, characteristics of buyout equity investments, valuation of private equity investment for venture capital, growth equity and buyout situations, risk and return among private equity investments and versus other investments as part of strategic asset allocation.
  4. “Private debt.” Use of debt financing in private market strategies and across investment lifecycle, use of leveraged loans, high yield bonds and convertible bonds in private market strategies, use of mezzanine debt and uni-tranche debt in private market strategies, private debt profile and ratio analysis to value private debt investments, risk and return of private debt investments versus other private market investments as part of strategic asset allocation.
  5. “Private special situations.” Addresses event-driven opportunities involving financial dislocation or distress, characteristics and risks of special situations, features of distressed debt, financing alternatives for issuers in financial distress and investment strategies in distressed situations and capital structure arbitrage and convertible arbitrage, features of complex investment situations involving financial dislocation or stress, due diligence and valuation processes used to evaluate special situations, risk and return among special situations as well as versus other private market investments as part of strategic asset allocation.
  6. “Private real estate.” Private real estate investment features, economic value drivers of private real estate investments such as value-add and opportunistic and their role in the portfolio, due diligence and valuation processes for private real estate, distinctive investment characteristics of timberland and farmland, risk and return among private real estate investments as part of strategic asset allocation.
  7. “Infrastructure.” Private infrastructure investment features, investment methods and investment vehicles and their uses, infrastructure investment process over the project life cycle and roles of debt and equity financing, due diligence and valuation processes for infrastructure investments, risk and return among infrastructure investments as part of strategic asset allocation.

What is included in the Portfolio Management pathway content? 

This contains the more advanced, public markets focused portfolio management content of the pre-existing CFA Program.
It is broken out into eight chapters:

  1. “Index-based equity strategies” Overview of index-based equity investing strategies, comparison of market-cap-weighted vs. factor-based strategies, approaches to index return replication, and portfolio construction (full replication, stratified sampling, and optimization), tracking error and sources of return and risk in an index-based equity portfolio. 
  2. “Active equity investing: strategies” Fundamental and quantitative approaches to active management aimed at outperforming a passive benchmark, rationale, and processes for bottom-up, top-down, factor-based, activist and arbitrage strategies, creation of fundamental and quantitative active investment strategies and equity investment style classifications.
  3. “Active equity investing: portfolio construction” Construction of actively managed portfolios, influence of manager’s investment philosophy, Active Share vs. Active Risk approaches, risk measures, risk budgeting, and the effects of risk limits, AUMs, position size, liquidity, and portfolio turnover on portfolio construction, evaluation of portfolio structure efficiency relative to mandate, risks, costs, and effects on potential alpha of portfolio construction approach. 
  4. “Liability driven and index based fixed income strategies” Dominance of Fixed Income securities and their role in investment portfolios, as well as selection, implementation, evaluation, and associated risk of strategies for managing liabilities under various interest rate scenarios to achieve a portfolio’s objectives, bond indexes and passive bond market exposure and criteria for benchmark selection and justification. 
  5. “Fixed-income active management: yield curve strategies” Active fixed-income management to generate excess return, including effect of benchmark yield changes on portfolio returns, and portfolio positioning strategy based on forward rates or expected changes in interest rate volatility, using duration to evaluate a portfolio’s sensitivity, and yield curve strategies across currencies and their expected return and risk.
  6. “Fixed-income active management: credit strategies” Considerations of spread-based fixed-income portfolios, including risk, comparison of spread measures, superiority of option-adjusted spread, bottom-up, top-down, credit-default-swap strategies and positioning strategies based on a specific credit spread view, assessing and managing tail and liquidity risk in credit portfolios, managing portfolios across international credit markets, using structured financial instruments as an alternative to corporate bonds and using analytical tools to manage fixed-income portfolios.
  7. “Case study in portfolio management: institutional” Examination of issues involved in the development of a strategic asset allocation for long-horizon institutional investors through a case study based on a large university endowment undergoing an asset allocation review and portfolio execution, liquidity risk measurement and management, application of Code of Ethics and Standards of Professional Conduct, derivative use to meet exposure and liquidity needs, and ESG considerations.
  8. “Trade strategy and execution” Trading and execution from a portfolio manager’s perspective across various markets, including equities, fixed income, derivatives, and foreign exchange, strategy selection and justification, execution benchmarks, cost measurement and evaluation, automation, including algorithmic trading and machine learning, as well as evaluation of firm’s trading processes and procedures from a regulatory perspective.

Portfolio Management

The CFA Program has been traditionally populated primarily by buy-side and sell-side equity and credit analysts aspiring to one day be portfolio managers and Chief Investment Officers.

The buy-side is evolving. Gone are the days when the buy-side centered on discretionary Portfolio Managers either running or selecting mutual funds for clients and sticking purely to the world of public markets investments. Many more types of professionals now are aspiring to an expanding range of roles on the buy-side as their “job after the job”.

Private Markets have boomed with the alternatives market forecast by Preqin to grow from $14T today to $23T by 2026, close to half of US equity market cap. Some call this a “golden age” for private credit as rates have risen and the focus has shifted beyond simply buy-outs.

With it, a second coveted (and highly compensated) “pinnacle” job today for juniors is an Investment Associate role at a General Partner firm. With its roots in M&A and the world of deal-making, private markets is more of a transactions workflow role than a traditional investing workflow role.

Private Wealth industry has also grown in prominence and stature as global wealth has grown faster than global output. Between 2000 and 2020 total investible assets globally rose from $160T (4x GDP) to $510T (6x GDP). Liquid assets make up $130T of this pie and are projected by Bain to grow to $230T by 2030 thereby doubling Wealth Management industry revenues. With it, the number being hired into the industry is booming. According to the Economist in September 2023, “once the business was a sleepy, unsophisticated corner of finance. Now it’s the industry’s future”.

The CFA Program has evolved to keep pace with the buy-side. 

Today, approximately half of discretionary portfolio managers are CFA Charterholders. Although many thousand CFA Charterholders today also work in both Private Markets and Private Wealth, gaps in the curriculum have emerged if we are to prepare candidates for these rapidly growing segments and evolving workflows.

While the Portfolio Manager role has some overlap with the Private Markets and Private Wealth job roles, we recognize there is more we can do to prepare candidates for promotion or lateral hiring into either of these two new job roles.

But we did not want to simply add 2,000 pages to the 2,500 pages of CFA Program Level III. Instead, we identified the things the three job roles had in common. Tasks such as asset allocation and portfolio construction. This we made the “common core” for Level III, taken by all candidates.

We then made three “specialized pathway” flavors of Level III, one for each job role, similar to the specializations available towards the end of most Master’s programs.


CFA Program Level III Pathways will sharpen your competitive edge. 

After passing Level II of the CFA Program, candidates should have an idea for which career path on the buy-side is of most interest to them. Budding single security analysts who want to move to the buy-side or be promoted to PM may choose Portfolio Management. Analyst or Associate bankers who want to land a role as an Investment Associate at a General Partner firm may choose Private Markets. Junior Wealth/Relationship Managers or Investment Advisers who want to serve High-Net Worth individuals may choose the Private Wealth pathway.

There are several benefits of choosing a Pathway aligned with your career aspirations:

  • Career discovery. Assess appetite for the job role
  • Learn the lingo. Master table stakes knowledge to avoid being tripped up in conversation
  • Interview edge. Conversation topic during conversations with prospective employers
  • Workflow mastery. Understand how the different steps in the workflow link together and the ultimate goals of the role
  • Credentialing. Passing a challenging exam for the role will benefit you by benefiting your clients and your employers

Will the CFA charter reflect the specialized path an individual earns?
No, there will be no distinction made on the charter itself.

Can you take more than one Pathway?
You can change your selection if you take Level III more than once. We intend to provide Members with the content for all three as refresher readings.

Will one pathway be easier than the other?
No. Each Pathway will have a fixed bar set at the same height. This does not mean that the pass rate will be identical between each as many factors influence pass rate such as quality of the cohort, mix of the cohort, hardness of the given set of questions in a given window, demographic factors etc.

Will there be essay questions on all three pathways?

How is the Private Markets pathway different from CAIA?
We focus primarily on the General Partner workflow while CAIA focuses primarily on the Limited Partner workflow and asset owner perspective. CFA Program comes at the end of a rigorous three level program. CAIA has only two levels.

How is the Private Wealth pathway different from CFP?
CFA Program has a significant ethical component. CFA Program comes at the end of a rigorous three level program and so is deeper and broader. CFP has only one level.

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