CFA vs CAIA

Difference Between CFA and CAIA

The full form for CFA has Chartered Financial Analyst offered by the CFA Institute and it is a three-year course that can be qualified in three levels whereas the full form for CAIA is Chartered Alternative Investment Analyst offered by the Chartered Alternative Investment Analyst Association and it can be qualified in two levels.

Finding oneself confused between two courses can be a nail-biting experience. Any decision can turn against you in the future. So, what is one expected to do in such a situation? Does that entirely mean that one should look for a third option? That is, of course, not needed. Confusion can be solved with a little bit of straining your eyes with reading exercise and working out your mind with logic and facts. So, if you are confused between which course to opt for, the CFA exam, or CAIA certification, I believe you need to carefully read this article before making a decision.

It is important to choose wisely and especially between a choice like CFA and CAIA, as both are very similar and finds a lot of takers from professionals determined to establish themselves in the field of investment or financial analysis.

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What is CFA?

CFA is the professional certification program conducted by the CFA Institute (formerly the Association for Investment Management and Research, or AIMR) for investment and financial professionals. The course is recognized and respected in the corporate world for its strong foundation of advanced investment analysis and real-world portfolio management skills that boost career prospects for investment and management professionals.

The program module is structured in a format that meets the demand of the global investment industry. The course keeps on evolving and adds on to the new practices of the industry. However, it covers the broad topics relating to investment management, financial analysis, stocks, bonds, and derivativesDerivativesDerivatives in finance are financial instruments that derive their value from the value of the underlying asset. The underlying asset can be bonds, stocks, currency, commodities, etc. The four types of derivatives are - Option contracts, Future derivatives contracts, Swaps, Forward derivative contracts. read more and provides a generalist knowledge of other areas of finance.

What is CAIA?

The Chartered Alternative Investment Analyst is a designation offered by the CAIA Association on successful clearing of the CAIA exam- an exam conducted by the institution to award the designation to investment professionals. The successful passing of the exam by a candidate allows him the recognition of being a specialist in the field of alternative investments such as hedge fundsHedge FundsA hedge fund is an aggressively invested portfolio made through pooling of various investors and institutional investor’s fund. It supports various assets providing high returns in exchange for higher risk through multiple risk management and hedging techniques.read more, private equity, real estate investment, and venture capital. The designation is achieved by clearing two exams organized by the CAIA institute.

This designation is globally recognized as a benchmark for professionals wanting to achieve a distinction in alternative investmentsAlternative InvestmentsA financial asset that is different from the conventional investment categories such as stocks and cash is referred to as an alternative investment. Private equity, hedge funds, venture capital, real estate/commodities, and tangibles such as wine/art/stamps are all examples of alternative investments.read more.  It enables a professional to understand a portfolio from the investor’s perspective and implement diverse strategies and learn the fundamentals of alternative investment class and apply the asset allocated information to achieve result-oriented decision making.

CFA vs. CAIA Infographics

Let’s see the top differences between CFA vs. CAIA.

CFA-vs-CAIA-info

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Exam Requirements

CFA CAIA
To qualify for the CFA program, a candidate must have a bachelor’s (or equivalent) degree or be in the final year of his bachelor’s degree program (an update is required on attaining the degree to qualify for Level II) or a minimum of four years of professional experience. The CFA certificate is only awarded after a candidate attains four years of experience even after clearing the exam. To appear for the CAIA exam, candidates must have at least one year of professional experience and a bachelor’s degree.

CFA vs. CAIA Comparative Table

SectionCFA CAIA
Organizing BodyThe CFA exams are controlled and managed by the CFA Institute, USA. The exams are controlled and managed by the Chartered Alternative Investment Analyst Association, USA.
PatternTo qualify as CFA charter holder, the candidates need to clear 3 sequential levels

 

  • Level I
  • Level II
  • Level III
 To qualify as CAIA professional, the candidates need to clear 2 sequential levels

 

  • Level I
  • Level II

 

Duration of CourseThe candidates can become charterholder in 4 years if they can clear all the exams in their first attempt. Most candidates are able to complete the course in a span of 1 year to 1.5 years.

 

 

SyllabusThe syllabus primarily includes the following topics

 

  • Economics
  • Quantitative Methods
  • Ethics & Professional Standards
  • Financial Reporting and Analysis
  • Portfolio Management
  • Corporate Finance
  • Equity Investments
  • Alternative Investments
  • Derivatives
  • Fixed Income
 The syllabus primarily includes the following topics

 

  • Professional Standards & Ethics
  • Hedge Funds, Private Equity, Real Assets & Structured Products
  • Alternative Investments
  • Due Diligence & Selecting Strategies
  • Institutional Asset Owners & Investment Policies
  • Volatility & Complex Strategies

 

Exam FeesThe total cost of the course comes to be in the range of $2,550 to $3,450, which includes enrollment fee ($450) and exam fees that vary based on the time of registration. The total cost of the course comes to be in the range of $2,700 to $2,900, which includes enrollment fee ($400) as well as exam fees. The exam fees vary based on the time of registration.  The AIMA company members and professional associations are eligible for additional discounts on exam fees.
JobsSome of the common profiles include

 

  • Strategic Analyst
  • Investment Analyst
  • Financial Consultant
  • Wealth Manager
  • Portfolio Manager
 Some of the common profiles include

 

  • Hedge Fund Analyst
  • Portfolio Manager
  • Private Equity Analyst
  • Investment Consultant

 

DifficultyThe level of difficulty is very high as only 1 out of every 10 aspiring candidates can clear all three levels. The pass rates of Level I, Level II, and Level III for the exams conducted in June 2019 were 41%, 44%, and 56% respectively. The level difficultly is quite high as only 1 out of every 3 aspiring candidates can clear both levels. The pass rates of Level I and Level II exams conducted in September 2020 were 52% and 65% respectively.
Exam DateThe upcoming exams for the year 2021 are scheduled to take place as follows

 

  • Level I: February 16 – March 01, May 18-24, August 24-30, November 16-22
  • Level II: May 25 – June 01, August 31 – September 04
  • Level III: May 25 – June 01, November 23-25
 The upcoming exams for the year 2021 are scheduled to take place as follows

 

  • Level I: February 22 – March 05 and August 30 – September 10
  • Level II: March 08-19 and September 13-24

 

Why Pursue CFA?

The CFA study program covers almost the entire subject in its entity, but it skims through the topic giving an overall outlook to the student. It also covers alternative investments but not in detail. However, CFA is a global brand, and the institute enjoys a large membership base. This designation is considered the preferred course to achieve a better and broader scope in traditional investment.

CFA should be the ideal course for you if you are looking to carve out a niche in the traditional investment roles, such as fund managers and security analysts. The certificate program does not enjoy a high rate of passing and therefore has a prestige associated with it, which makes a professional stand out in the eyes of his employer.

Unlike other international certifications, CFA is cheaper and gives you a good grounding base about the financial marketsFinancial MarketsThe term "financial market" refers to the marketplace where activities such as the creation and trading of various financial assets such as bonds, stocks, commodities, currencies, and derivatives take place. It provides a platform for sellers and buyers to interact and trade at a price determined by market forces.read more and improves your expertise and knowledge.

You may have a look at a detailed note on the CFA examination guideCFA Examination GuideThe Chartered Financial Analyst (CFA®) Program offers a graduate-level curriculum and examination program designed to expand your working knowledge and practical skills related to investment decision-making. read more for further details.

Why Pursue CAIA?

CAIA is a perfect course for those individuals who wish to fill the educational gap to rise quickly in the alternative investment field. The CAIA designation holders are relatively less than CFA charter holders and give a good chance to a candidate to stand out from the rest in the job market.

CAIA is seeing tremendous growth in the last few years, and anyone interested in a specialization should prefer this course. The pass rates for CAIA are quite high; however, it does not directly open the doors to big opportunities.

However, CAIA helps in achieving more client base and professional networking connections through membership in global chapters.

Conclusion

You have all the necessary information in this article, its time you weigh your options carefully and decide. After all, you alone are responsible for shaping your career. We wish you all the luck and hope you find greater success in whichever course you opt to study.

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Reader Interactions

Comments

  1. Wagner Paulin says

    Very informative blog. This was really very helpful to me and was something really interesting to know about CFA and CAIA. I had a small question that is what time duration is for CAIA Exam. Are there any fixed dates to sit for CAIA Exam?

    • Dheeraj Vaidya says

      I am glad you liked this article :-). And yes there is a particular date to sit for CAIA exam. Mostly the exams are held in March and September. And the exam duration here is for 4 hours also with an optional 30 minutes break. Hope this helps you

  2. Robertson Braedon says

    Thanks for giving such wonderful comparison between CFA and CAIA certifications. I just wanted to know what the actual enrollment fee is to sit for CFA Exam and I also want to know the exam period CFA?

    • Dheeraj Vaidya says

      Thanks for your note. The enrollment fee of CFA is US$440 and the CFA exam fee ranges from US$800 up to US$1170 as per the deadlines. Additionally, CFA Level 1 exams are held in June and December and CFA Level 2 and 3 are held only in June

  3. NRI says

    Hi Dheeraj,

    Thanks for the article. I would really appreciate your advice.
    – I am 25 yo with a bachelor and master degree in Engineering from Canada.
    – I am running start-ups in the tech and education sectors since graduating from masters since 2 years ago. I have 3 years of engineering research experience in oil & gas (internships and masters).
    – I am very motivated to break into the investment banking field. I have always been very interested in global finance and trade. Looking to make IB my long term career hopefully!

    – I know my background is not really optimal right now and I am looking to get a certification in finance to boost my profile.

    I have 2 questions:

    (1) What certification should I get?
    I need something that will help me get into IB while having no previous experience in the field. Im leaning towards CFA but really not sure.

    (2) What positions can be entry points for me?
    Im thinking of petroleum-related ‘business analyst’ positions. Either the position or the firm has a focus on petroleum so I make sense as a candidate. Most entry-level positions are for new graduates from finance majors (not a match for me!)

    Would really appreciate your advice on this. At 25 I already feel that clock ticking!

    • Dheeraj Vaidya says

      Hi,

      I think you got it right here.
      1) Completing CFA will provide a boost to your Financial Resume.
      2) Seeking opportunities in IB that complements your previous experience will be plus. Petroleum/Oil & Gas Sector based Analyst profiles for IB will suit you perfectly.

  4. Ciri Barragan says

    Is getting the cfa and the frm a good combo or it sends contradicting information to employers?

    • Dheeraj Vaidya says

      Hi Ciri,

      the combination is great provided you do this as early as possible. Though I was in IB/Research profile, FRM always helped me understand the risks involved in assets and also helped me understand the full impact of financial events globally.

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