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May 7, 2026
Although the Alternative Investment topic on the CFA® Level I exam is relatively minor, it still carries weight in your overall score. Therefore, gaining a solid grasp of the foundational concepts and calculations for Level I will also be essential for preparing you for Level II.
Alternative Investments is a short topic area in the CFA curriculum. The readings are laid out logically:
A broader introduction to Alternative Investments
A look at the return calculations
Then a look at the key characteristics of different types of Alternative Investments
After studying each reading, practice as many questions as you can using QBanks to test your understanding of this topic. Since it’s a small section of the exam, don’t forget to dedicate at least a week to your study plan for Alternative Investments.
Learning Outcome Statements while studying for a CFA exam refer to specific skills and concepts you should possess within an exam topic whereas exam topics describe the broader body of knowledge you should have. For example, the Alternative Investments exam topic at Level I has a small number of LOSs that you’ll need to learn.
An example of a CFA LOS for Alternative Investments is “describe issues in performance appraisal of alternative investments.”
As an analyst, it is important to have an understanding of a broad range of possible investment options in order to make suitable investment decisions. Over the last decade in particular the Alternative Investments market has grown significantly and continues to do so.
The Alternative Investments topic represents 7%-10% of the Level I exam, which is approximately 9-14 questions. It is tested in the afternoon session, within the Assets Area, alongside Equity Investments, Fixed Income, and Derivatives.
As long as you designate some time to Alternative Investments, this tends to be a fairly manageable area of the syllabus. It’s the smallest exam weight (alongside Derivatives), and is seen as an introduction to different types of Alternative Investments.
Focus on becoming familiar with the characteristics of investments such as Real Estate and Hedge Funds, and you should be able to achieve a good grade on exam day.
This is a standalone topic that can be covered at any point during your studies. If you decide to study this earlier on, do make sure you review the content again closer to the exam as it is easy to forget about this area due to its shorter, less technical nature.
However, these can be quicker marks on exam day than long complex calculations, so Alternative investments should not be neglected.
Below are overviews of each Level I Alternative Investment reading and what you are expected to learn.
The topic area begins by describing features and categories of alternative investments, methods for investing in them (directly or through investment funds), and the ownership and compensation structures they commonly use.
Performance appraisal can be more tricky for Alternative Investments as compared to traditional investments, particularly when considering returns before and after fees. This reading considers what risks arise and which performance measures can be used.
Each of these four readings takes the assets from their titles and considers the key characteristics of each in turn, including the potential benefits, risks and return from an investment.
The final reading in Alternative Investments explains the features of digital assets and vehicles for investing in them.
There are no specific calculation functions to learn for Alternative Investments but make sure you spend the time practicing the fee calculations within the second reading.
Answer these five CFA practice questions to test your readiness for the Level I Exam.
Alternative Investments is a similar weight on the Level II exam compared to the Level I exam. Level II builds on the foundations learned at Level I to focus:
Real Estate
Private Equity
Commodities
We would recommend starting off by reading the SchweserNotes for Alternative Investments, which also provide illustrative examples and Module Quizzes for you to test your understanding. Once you have covered the material, you should cover as many other questions as possible from our range of resources such as the Schweser QBank.
Looking for more guidance on how to prepare for Alternative Investments? Enroll in one of our CFA Level I Premium study packages to receive expert instruction, CFA Program study materials, and more. Give yourself the best chance to prepare, practice, and perform on the CFA exam.
Written by Kaplan Schweser experts, reviewed by Craig Prochaska, CFA.
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