June 2008
- Asia Rising
- CAIA Association Names
Associate Director of Industry Relations - EMEA
- March 2008 Exam Results
- Alternative
Viewpoints -"Academic
Rains on Weather/Return Correlation Parade"
- Take the Challenge: the CAIA
Mini Quiz
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Director's
Comments
Asia Rising
Over the course of my career, I have traveled extensively throughout Asia. I also lived in Singapore for a time. But during our latest journey to this fascinating area of the world, I was struck anew by the sheer enthusiasm and overwhelming sense of opportunity that permeated the atmosphere.
Cranes were everywhere, as constructions crews worked 24/7 in a frantic
effort to keep up with the demands of the visionaries. People
crowd the streets and sidewalks, seeming to move and work in concert on
some unified mission. And the smell of cross-border M&A - as
well as exotic foods and spices - is pungent and intoxicating. Everyone
is busy! One doesn't need a crystal ball to ascertain that
this region is on the cusp of something huge.
While other financial centers in our ever-shrinking community are
anxiously watching the global economy, capitalism is very much alive
and well in Asia. And we're pleased to note that the CAIA
Association is a growing microcosm of the ebullient and joyous mood;
full of optimism, energy, and excitement.
In the past few months, we have focused our efforts on smaller, more
intimate presentations for corporate audiences. To our great delight,
these presentations have proven to be extremely successful in bringing
the CAIA Association directly to the decision makers and raising
awareness of the CAIA designation among potential candidates. Our
recent visit to Hong Kong and Singapore was no exception.
We conducted meetings with members, candidates and interested parties at some of the most well-known of the financial institutions in the region: Fortis, the Monetary Authority of Singapore (MAS), UBS, Credit Suisse, Bank of New York Mellon, Stirling Finance and the Hong Kong Venture Capital Association (HKVCA) among them. We also met with representatives from the Bank of China, the second largest bank in Hong Kong with 280 branches and 14,000 employees.
On this side of the Atlantic, the mood is tense and uncertain.
I am encouraged that at a time when global economies are increasingly
intertwined, hope and a bustling financial market are thriving
elsewhere in the world. It bodes well for all concerned.
Best regards,
E. Craig Asche
Executive Director
CAIA Association Names Associate Director of Industry Relations - EMEA
The CAIA Association® is pleased to announce that Steve Wallace has joined its ranks as the Associate Director of Industry Relations for Europe, Middle East, and Africa. Mr. Wallace will help grow and strengthen the Association's worldwide membership and visibility among its constituencies in the alternative investment community.
As Associate Director of Industry Relations, Mr. Wallace will work to drive awareness of the CAIA Association and its exam to potential members in all financial sectors. He will be responsible for establishing outreach opportunities and presenting the CAIA program at sponsored events across Europe, the Middle East and Africa.
Before joining the CAIA Association, Mr. Wallace managed client relations for several UK firms - most recently with an emerging market equity hedge fund as well as ING Wholesale Banking. In addition, he spent seven years working in the Private Wealth Management sector in Australia, primarily in investment strategy for firms, including the Private Bank division of National Australia Bank and AXA Australia.
Mr. Wallace is a graduate of Royal Melbourne Institute of Technology with a degree in financial planning. He earned his CAIA designation in 2007 and played an important role in building the success of the CAIA London chapter. We welcome Mr. Wallace to the CAIA Association team and look forward to his great success in raising awareness of the CAIA program and designation in these important and emerging areas.
To read the official press release, click here.
March
2008 Exam Results - Congratulations to All
The CAIA Association is pleased to
announce that 564 candidates
successfully passed the Level II exam in March and are well on their
way to becoming CAIA members.
The Association continues to enjoy unprecedented growth; over 2000
people worldwide have earned the CAIA designation. Next month we look
forward to making a press announcement to celebrate the extraordinary
achievement of this group of dedicated alternative investment
professionals.
September
2008 Exam Notes
September 2008 Exams
Register for an exam here
Exam dates: September 08 - 19, 2008
Final exam registration closes July 29, 2008
Scheduling an Examination Appointment:
Pearson
VUE testing centers are open to scheduling for the September
2008 CAIA exam period. We strongly recommend scheduling your exam
appointment with them as soon as possible to ensure a seat at your
preferred testing center. All exams are scheduled directly through Pearson VUE.
If you have not received your scheduling instructions, please contact candidate@caia.org.
We are pleased to note that Pearson VUE just opened
testing centers in Bahrain and
Karachi to deliver CAIA exams during the September 2008
testing window. As of June 9th, currently registered candidates can now
book
exam appointments there for the September 2008 session.
Alternative Alternatives - Survey Results
Over 400 CAIA members participated in our online poll about "Alternative Alternatives" last month. Thank you to everyone who took time from their very busy schedules to weigh in on this evolving issue in the AI space.
Senior CAIA Curriculum Advisor George Martin of Alternative Investment Analytics and Chris Holt of AllAboutAlpha.com explore the implications of your input and broke the responses down to four major conclusions. Click here to survey the results and stay tuned for more opportunities to explore trends unique to alternative investments. Our goal is to be the premier voice for what's happening in alternative investments and we're proud that CAIA members are at the forefront of this effort.
Alternative Viewpoints - powered by CAIA
"Academic
Rains on Weather/Return Correlation Parade,"posted May 29 on
AllAboutAlpha.com
Wessel Marquering, Ph.D., CAIA
Talergroup
As readers of this website are no doubt aware, weather derivatives trading is taking off - with trading volumes going through the roof and more hedge funds venturing into this space. Basically, a weather derivative is a financial product in which two parties agree to exchange cash flows determined by reference to a weather index. The reference indices include temperature, rainfall, wind speed, humidity, snowfall, to name a few, but the most heavily traded contracts are based on temperature indices.
On the one hand, weather derivatives can be used to manage risk, by insuring for example farmers against a bad crop, as an insurance against bad weather on holidays, by decreasing the exposure to temperature-related risk factors, etc. On the other hand, they have become a relatively new way to generate alpha.
These alpha opportunities arise because weather derivatives
are difficult to price. And since weather patterns are not random, the
Black-Scholes option model is not entirely appropriate. Some hedge
funds actually hire meteorologists and run highly quantitative models
to forecast the weather in an attempt to identify "bargain" contracts.
Since the weather is uncorrelated to, for example, sub-prime, Iraq war,
etc., they are a great addition to investors' portfolios.
AllAboutAlpha.com's
column, Alternative Viewpoints, aims to provide the thoughtful and
reasoned opinions typical of CAIA members on the various topics covered
by AllAboutAlpha.com. AllAboutAlpha.com is read by over
10,000 unique readers each month in the hedge fund and greater asset
management industry.
Take the Challenge: the
CAIA Mini Quiz
Think you're equal to the challenge of the CAIA mini quiz?
Derived from our sample Level I and Level II exam questions,
the CAIA mini quiz is timed, the results are tallied, and the correct
answers appear beside each question. Just to whet your appetite, here's
a sample question/answer:
Q: Which term describes the following relationship between the expected futures spot price and the price of the commodity futures contract?
E(ST) > FT
A. Roll yield
B. Contango
C. Parity
D. Backwardation
Got 15 minutes? Put your AI knowledge to the test; take the CAIA mini quiz today!
Click here to view
the answer!
Meet a CAIA Member
Dan
McCurdy, Ph.D., CAIA
Portfolio Manager & Wealth Advisor
Abundance Wealth Counselors, LLC
Among
the 2,000 plus holders of the CAIA designation, it is likely that Dan
McCurdy is the only one who also has a Ph.D. in molecular physiology
and biophysics. Obviously Dr. McCurdy's career path took a right turn
at some point for him to arrive as a portfolio manager and wealth
advisor at Abundance Wealth Counselors in State College, Pennsylvania.
Nonetheless, he suggests that his in-depth training in physiology and
biophysics ultimately has proven applicable to his work as an
investment professional. "My Ph.D. gave me a knowledge base in areas
outside of my day-to-day experiences that over time has been helpful in
putting the big picture together," he said.
When it came time to build a working knowledge of alternative
investment strategies, however, Dr. McCurdy chose a more conventional
approach, abandoning neuronal glutamate transporters and synaptic
receptor trafficking in favor of hands-on study in the CAIA Program.
"The CAIA Program was challenging, it really was like a mini-Ph.D.
program in alternative investments," said Dr. McCurdy. "It has allowed
me to understand the critical factors in the day-to-day analysis of all
of our alternative investments, to better analyze what our clients hold
and also to improve my ability to look for future investment
opportunities."
This understanding is of particular use in Dr. McCurdy's daily work
managing portfolios and performing due diligence on the alternative
investments his clients hold, which he says run the gamut from "hedge
fund of funds to mezzanine real estate to private equity and venture
capital." From the client's perspective, he believes the CAIA
designation is important because "it provides a benchmark by which
clients know that I have a knowledge base to access in analyzing
investments with which they are often unfamiliar."
While Dr. McCurdy acknowledged that rank-and-file investors do not
necessarily know much about the CAIA designation yet, industry insiders
certainly do. "It is not yet well known, but for those in the industry
that have heard of the program, it is held in high regard. It is the
'gold standard' for analysts within the industry, exposing you to areas
of the investment world that you may not be exposed to on a regular
basis."
Dr. McCurdy earned the CAIA designation in October of 2006 and said,
for him, the most difficult aspect of the program was "making time to
study while working and having a family with young children." Time
management, he said, is vital for those entering the CAIA Program.
"Have a study plan. Map out the time you will need and then stick to
the plan."
Jasmit
Singh Chandhok, CAIA
Managing Director
Chandhok Investments
When Jasmit Chandhok launched an investment fund in New Delhi, India
five years ago, he realized from the start that his enterprise would
succeed or fail based largely on the credibility he was able to
establish in the marketplace. For investors to entrust their capital to
a fund composed entirely of funds from the emerging market of India,
they would need assurance that the firm's principal had a strong
reputation.
Five years later, the faith that investors have built in Chandhok
Investments has earned them a 25.6% annual internal rate of return as
of 30 April 2008. Credibility, of course, is one of the most difficult
characteristics to measure. Beyond the reputation built directly among
colleagues, investment professionals typically turn to professional
designations to build credibility, as Mr. Chandhok did when he earned
the Chartered Financial Analyst (CFA) and Financial Risk Manager (FRM)
designations. But in both those programs, he found "a dearth of good
information about the alternative investment industry," which led him
to the Chartered Alternative Investment Analyst (CAIA) Program.
"The CAIA Program is a good introduction to the alternative investment
industry," said Mr. Chandhok. "I think the CAIA Program is a good
complement to the FRM and CFA programs as it focuses on alternative
investments in detail, which is not the main focus area of [other
credentialing] programs. I enrolled in the CAIA Program to deepen my
understanding of the alternative investment industry and it has done
exactly that for me, helped me to better understand the workings of
private equity funds and hedge funds."
While the CAIA Program provides the baseline education in alternatives
that Mr. Chandhok was looking for, he also suggests the professional
network it has helped to him establish is of particular value. "For me,
the most compelling reasons for someone to enroll in the CAIA Program
would be, first of all, to learn more about the alternative investment
industry," he said. "But another good reason is to build a network of
contacts within the industry."
The ability to leverage a professional network is especially important
when working in an emerging market. "The CAIA Program is still new in
the Indian market," Mr. Chandhok concluded. "It is yet to attain
widespread acceptance; however, I feel that the Indian market itself is
maturing and in the coming years as the role of institutional investors
in the Indian market increases, the CAIA Program will gain in terms of
popularity and acceptance."
CAIA
Chapters: No Signs of Slowing Down
CAIA London is pleased to announce
the next event in their Educational Series, a presentation by Jan
Loeys of JP Morgan entitled "How Will the Crisis Change
Markets?" on July 3. We're happy to welcome The Bank of
New York Mellon as a sponsor for this event.
June has been a very active month for CAIA chapters- in addition to the
London educational event, members have hosted events in the San
Francisco Bay Area, Madrid,
Barcelona, Hong Kong
and Singapore. The CAIA Association also
hosted a member dinner at L'Espadon in
the Hotel Ritz Paris on June 12th. Thank you to all of the CAIA members
in France who joined us; we look forward to hosting similar member
dinners the future.
Summer tends to bring a lull in chapter activities as members embark on
their annual holidays, but it sounds like summer is going to be as busy
as ever!
The enthusiasm from our members is building worldwide and we continue to look forward to great things from all of our current - and future - chapters.
CAIAA's Summer/Fall Travel
Schedule
CAIAA just returned from a very successful trip to Singapore
and Hong Kong where our Executive
Director Craig Asche and Director of Marketing and Outreach Mary
Westervelt presented to financial associations, regulatory agencies and
professional associations.
In the coming months, we will be in the following cities:
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2008
Summer/Fall Travel Schedule
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August
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1st - 5th
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September |
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29th |
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30th & Oct 1st |
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October |
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2nd & 3rd
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*Please
note that these dates are subject to change.
The Association is available to give private, on-site
presentations of the CAIA program in each of these cities. These
presentations are an excellent way to increase your company's awareness
of the value of the CAIA program, as well as to highlight your
significant achievement in earning the designation.
Contact events@caia.org
for more information on planning an exclusive informational meeting for
your colleagues.
We look forward to seeing you while we are on the road!
Answer to the CAIA Mini Quiz:
D: This is the case where the agreed upon futures price is
discounted
compared to the expected future spot price. This condition is referred
to as "normal backwardation." The term normal backwardation comes from
John Maynard Keynes who theorized that commodity producers are natural
hedgers in the commodity markets and therefore would need to offer a
risk premium to speculators to induce them to bear the risk of
fluctuating commodity prices.