Choppier markets and the risks that the decade-long bull market in stocks will end must reignite interest in alternative investments, bringing with it demand for expertise, a practitioner argues.

A business association that promotes investment education in alternative sectors such as hedge funds and private equity says demand for talent needs to be met if or when markets turn more volatile.

Investors had a taste of heightened volatility earlier this year when markets slid in February, erasing year-to-date gains in just days before a recovery set in. That proved that it pays to diversify and hold alternative investments, the Chartered Alternative Investment Analyst Association told this publication. 

“Volatility has come back into the marketplace,” William J Kelly, chief executive of CAIA, said in a recent call. Kelly described the rollercoaster shift in markets of February thus: “If that’s not behavioural finance on steroids, I don’t know what is.”

“What people should be seeking is more diversification,” he continued.

Conventional, long-only investments in areas such as equities have flourished over the past 10 years as central banks have turned on the taps of cheap money, but the investment story is now getting more complicated, Kelly said. The asset management industry and educators have a responsibility to spread responsibility around investment and finance, he added. “Everybody has to get on board here.”

In early April, CAIA launched a pilot programme for highly accomplished candidates to move straight to a second-level examination. Up to 500 candidates, made up of CFA Institute members in good standing, will be able to waive passage of Level I of the CAIA exam and immediately begin preparing for Level II. Upon successfully passing the Level II exam and joining the CAIA Association, candidates earn the CAIA Charter.

The association said it will examine results of the pilot to better understand how to best meet the growing need for education in the alternative investment space, particularly with an audience who has already acquired a base of knowledge.

The pilot programme will also be open to students in the soon-to-be-launched Masters in Alternative Investments program at the Isenberg School of Management at the University of Massachusetts Amherst, one of the original founders of the CAIA curriculum. This programme was selected for the pilot based on its adoption of the learning curriculum from CAIA’s Level I textbook. In the future, other academic programmes using CAIA’s curriculum in their teaching may also be added to the stacking initiative.

In the first phase of this programme, CAIA will cap enrolment by CFA charter-holders looking to “stack” their credentials within a handful of markets, including most regions of the world. Applicants to this programme who meet all of the relevant criteria will be able to register for the September 2018 Level II exam cycle. 

The association supports 30 global chapters in financial centres in Europe, Asia-Pacific, and North America, drawing members from more than 90 countries. CAIA as an organisation covers those working in areas including hedge funds, structured products, private equity, property, infrastructure and commodities.

This news service regularly tracks talent management initiatives and developments around the world as they affect wealth management. See here for the latest round-up.