CFA Level 1 Alternative Investments

Private capital, real assets, hedge funds, fund structures, and alternative investment methods organized for Level 1 exam review.

3

Modules

14

Concepts

5

Formulas

7

Quiz Questions

Alternative Investments Study Overview

Alternative Investments at CFA Level 1 introduces assets and structures that sit outside traditional stocks and bonds. Focus on how private capital, real assets, hedge funds, and digital assets differ by liquidity, valuation, fees, regulation, and investor access.

Compare fund investing, co-investing, and direct investing by control, fees, diversification, and required expertise.

Understand limited partnership structures, capital commitments, capital calls, distributions, management fees, and carried interest.

Connect real estate, infrastructure, hedge funds, and private capital examples to the exam angle: risk, return, liquidity, valuation, and due diligence.

How to Study This Topic

  • Start with the features, methods, and structures lesson before moving into private capital and real assets.
  • Use the module quiz after each lesson to test definitions, fee calculations, and structure comparisons.
  • Review the mind map when you need a quick split between asset categories, investment methods, and fund terms.

Modules in Alternative Investments

3 learning modules covering 5-8% of the CFA Level I exam.

1

Alternative Investment Features, Methods, and Structures

5 concepts 3 formulas 3 questions
2

Private Capital: Equity and Debt

4 concepts 2 questions
3

Real Estate, Infrastructure, and Hedge Funds

5 concepts 2 formulas 2 questions

Key Formulas

5 essential formulas for Alternative Investments.

Cap Rate

Cap Rate = NOI / Property Value

Real estate income yield

Property Value

Value = NOI / Cap Rate

Income approach to RE valuation

Management Fee

Fee = Rate × AUM (or Committed Capital)

Typically 1-2% annually

Performance Fee

Incentive Rate × max(0, Return - Hurdle)

Typically 20% above hurdle

Net Return to LP

Net = Gross - Mgmt Fee - Perf Fee

What investor actually earns

Start Studying Alternative Investments

Dive into 3 modules with cheat sheets, flashcards, quizzes, and mind maps.

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