Alternative investing education grows in stride with fast-growing liquid alts space

Wirehouses and broker-dealers are seen as the next area of expansion for year-old program

Apr 2, 2015 @ 12:03 pm

By Jeff Benjamin

At the one-year mark, the online course focusing on the basics of alternative investing is migrating across the financial advice industry, according to the Investment Management Consultants Association and the Chartered Alternative Investment Analyst Association, which jointly sponsor the program.

To keep pace with the ever-changing investment landscape, the two groups have added a new module to the course that focuses exclusively on liquid alternatives, one of the hottest areas of fund growth. So far, more than 1,000 individual advisers and brokerage reps have signed up for the Fundamentals in Alternative Investments Certificate program. While representatives from both IMCA and CAIA say they are happy with the progress and appeal of the program, the ultimate bright side is seen through participation by at least a half dozen asset management and broker-dealer firms.

“With the wirehouse and brokerages, a whole new segment is coming into the space,” said William Kelly, chief executive of CAIA, a global network of more than 7,300 alternative investment professionals in more than 80 countries. CAIA and IMCA continue to make inroads at broker-dealers and asset managers to encourage more advisers and investment pros to take the course.

The organizations would not disclose the full list of firms that are encouraging their reps and employees to sign up for the program, which they said numbered between six and eight, but they did list three: Deustche Asset & Wealth Management, RC Securities and Hatteras Funds.

“We're certainly happy about where we are at this point,” said Keith Black, managing director of curriculum and exams at CAIA. “It's nice to see that we could get 1,000 candidates in the first year. The results have exceeded our expectations.”

The self-directed program, which includes 21 modules and gives students 11 months to complete, was created to address the expanding base of alternative investment products and strategies.


Completing the program by scoring at least 70% on each module test does not generate a new certification, but financial advisers can earn continuing education credits.

According to Morningstar Inc., there are nearly 550 alternative-strategy mutual funds, with more than $315 billion in total assets. That's up from 427 funds and $264 billion a year ago. And 10 years ago, the group consisted of just 116 liquid alt mutual funds and $22 billion in total assets.

Barclays Capital Solutions Group estimates that by 2018, the assets in the category will have grown to between $650 billion and $950 billion.

The growing appeal of alternative investments, especially in light of the extended run-up in the stock market, is among the reasons the educational program was created.

“For those advisers that don't have the time or inclination to obtain a certified alternative investment analyst designation, this program is a great alternative, no pun intended,” said Jill Guess, director of research at Prism Advisory Group.


Ms. Guess, who has the CAIA designation, said the fundamentals program “covers the major alternative asset classes and strategies without going as deep into the weeds mathematically as the CAIA program.”

“As the use of alternatives spreads, both in the mutual fund format and traditional limited partnerships, it's imperative for advisers using them to understand the critical details of the risks of each strategy, as well as the best way to incorporate them into a client's portfolio,” she added.

IMCA executive director Sean Walters said the certification program has been designed for advisers at multiple levels.

“Investment advisers working across all firm types and business models must be well versed in the intricacies of alternative investments in order to strategically employ them in client portfolios,” he said.


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