Alternative Investments
Explore the world beyond stocks and bonds — hedge funds, private equity, real estate, commodities, and infrastructure. Once exclusive to institutions, now essential knowledge for every serious investor.
Course Overview
What is Alternative Investments?
Alternative investments are no longer the exclusive domain of ultra-high-net-worth individuals and institutions. Following the 2008 financial crisis — when even well-diversified traditional portfolios suffered severe losses — alternatives demonstrated their ability to provide genuine diversification, downside protection, and alpha generation. This course covers the full landscape of alternative asset classes, investment strategies, performance evaluation, and due diligence.
Learning Objectives
What You Will Learn
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Asset class overviewUnderstand the defining characteristics of hedge funds, private equity, real estate, commodities, and infrastructure.
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Hedge fund strategiesDistinguish between long/short equity, global macro, event-driven, relative value, and multi-strategy approaches.
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Private equityUnderstand the LBO model, venture capital, growth equity, and the private equity fund lifecycle.
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Real assetsAnalyse real estate, infrastructure, timberland, and commodities as inflation hedges and diversifiers.
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Due diligenceEvaluate alternative fund managers — performance metrics, fee structures, transparency, and survivorship bias.
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Portfolio constructionApply alternatives in a broader portfolio context — correlation benefits, illiquidity premium, and risk budgeting.
Who Is This For?
Prerequisites & Who Should Enrol
- CFA candidates — Alternative Investments is a tested topic across all three levels.
- Portfolio managers considering allocating to alternatives.
- Finance professionals working in or targeting hedge fund, PE, or family office roles.
- Investors seeking to understand how sophisticated portfolios are actually constructed.
- A basic understanding of equity and fixed income markets is recommended.
Got Questions?
Frequently Asked Questions
Why did alternative investments gain popularity after 2008?
The 2008 financial crisis showed that traditional equity-bond portfolios could suffer devastating correlated losses. Alternatives — particularly hedge funds and real assets — demonstrated lower correlation to public markets, providing genuine diversification when it was needed most.
What is survivorship bias in hedge fund indices?
Most hedge fund indices only track funds that continue to operate. Funds that fail or close are removed from the index, creating an upward bias in reported returns. Providers like HFR attempt to mitigate this by tracking fund performance through to liquidation.
How important are alternatives for the CFA exam?
Alternative Investments is covered across all three CFA levels — fundamentals at Level 1, valuation at Level 2, and portfolio allocation at Level 3. Our tutors cover every sub-topic precisely aligned to your exam level.