- Director’s Comments
- Exam Updates
- Alternative Viewpoints
- Chapter Events
- CAIA Out Front
Director’s Comments
History Repeating Itself?
We are well over a month into the New Year and still significant uncertainties overhang the financial industry in general and the alternative investment community specifically.
In Europe, institutions still lack clarity on a number of critical issues surrounding the Alternative Investment Fund Managers (AIFM) directive. With Spain having assumed the Presidency of the European Union at the beginning of 2010, and despite an optimistic assessment of progress from the outgoing Swedes, significant divisions remain on a number of key issues. These include such fundamental questions as what rules will govern registration and authorization; what institutions will be allowed to take customer deposits and what reporting requirements will they be subject to in order to properly monitor systemic risk; what models, frequency, and independence of valuation are appropriate; whether remuneration should follow that of the banking sector or be adjusted to reflect the unique structural differences in the AI industry; and how will funds domiciled within and without be allowed to market themselves in the EU?
In the US, in addition to much of the above, financial institutions are uncertain in what businesses they will be allowed to compete. Senior advisors within the Obama administration, including ex- Fed chairman Paul Volcker in his current role as Chairman of the Economic Recovery Advisory Board, are strongly advocating for the reinstatement of the 1933 Glass-Steagall Act, which was repealed in 1999.
Briefly permit me to review some of the events that led to the Act’s enactment because they share eerie similarities with what is taking place in the US and Europe currently.
The Act was conceived as a means of addressing the speculative excesses of the 1920’s believed to have caused or, at a minimum, contributed to the Great Depression. At the time, politicians blamed banks for taking undo risk with depositor’s funds, and thus recommended a separation between commercial and investment banking activities. Politicians pointed to the inherent conflicts of interest in permitting banks to underwrite corporate stock and bond offerings. They blamed banks for putting their own self-interests (e.g. promoting their own underwritings) above those of the individual investor. Public support for the Act’s passage came after bank officials were dragged before the Senate Banking and Currency Committee to defend actions they took prior to the stock market’s collapse.
Fast forward to what has been taking place now and it’s hard not to see the similarities – banks being blamed for excessive speculation, for putting their own self-interest before that of the investor, and ultimately being asked to publicly defend their actions.
Is it any wonder we hear a rising chorus of calls for the Act’s reinstatement in the US? Hardly.
Uncertainty created by these debates poses a serious dilemma for politicians, regulators and industry globally. Industry cannot establish sensible long-term strategies in the absence of clarity on these fundamental questions; however, one would hate for government to rush policy implementation before properly assessing potential impact. Moreover, in the absence of global coordination, policy recommendations may well lead to significantly uneven playing fields, or worse, result in a “beggar thy neighbor” isolationist approach.
How long the markets will wait is unknown, but if recent volatility is any indication, time may be running short. What’s needed now is balanced reasoning that can only come through a constructive dialogue between all the stakeholders.
If the past is any indication, we all have significant “skin in this game” as the outcome of these critical debates will likely determine the stability of our financial markets for generations to come.
E. Craig Asche
Executive Director
Exam Updates
Reserve a Seat at Testing Center for March 2010 Exam
Although registration for the March 2010 CAIA exam is closed, CAIA candidates who registered can schedule an exam appointment at their nearest Pearson VUE testing center at any time. Appointments should be made as soon as possible to ensure a seat on the day of the exam. View scheduling instructions on caia.org. You must log on as a registered candidate to view the instructions.
If you encounter scheduling difficulties, contact Pearson VUE immediately. Contact numbers are provided in the scheduling instructions.
Exam Policy on Calculators and Formulas
Only the TI BA II Plus (as well as the Professional model) or the HP 12C (as well as the Platinum edition) are allowed during the CAIA exams. No other calculators are allowed in the testing room. There are no exceptions to this policy. As in the past, exam proctors will require that all calculator memory be cleared prior to the start of the exam.
Effective with the March 2010 exam, key equations will not be provided as an exhibit on the exam.
Identification Requirements for the Exam
Proper identification is required to enter the testing room. Review the identification policy.
Exam Study Guides
Exam candidates are reminded to frequently check the Study Guides page on caia.org, where updated errata to assigned readings and study guides can be found. Candidates who find any possible errata not posted should contact curriculum@caia.org.
Next Exam Registration
Registration for the next exam period opens April 5, 2010.
Tentative dates for the exams are:
- Level Exam Session: September 13 – 24, 2010
- Level II Exam Session: September 20 – October 1, 2010
Alternative Viewpoints... powered by CAIA
Examining "Real Alpha" and "Exotic Beta" in mutual funds
Special to AllAboutAlpha.com by: Jane Li, CFA, CAIA, Manager, Investment Management & Research Team, FundQuest
With the explosion of hunters searching for the same scarce alpha and the proliferation of high-frequency trading, is asset management still all about alpha? Yes, says Jane Li, CAIA, of FundQuest, a division of BNP Paribas. Her research of over 10,000 mutual funds (both alive and dead) collectively managing $4 trillion shows that it depends on which category of fund you’re talking about.
Many argue that more efficient financial markets permanently reduce the potential for managers to produce bona fide alpha. For example, the author of Illegal Alpha, published on AllAboutAlpha.com in November suggested that
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“…nowadays talk of alpha generation and alpha-beta separation still permeates, though the search for it – and expectations of finding it – has greatly diminished.”
I disagree. In fact, following the significant out-performance of many active managers over their passive peers in 2009, it seems logical that investors will rekindle their passion for searching for alpha.
To continue, please click here.
Chapter Events
Throughout the year, a variety of networking and educational events are held at the 11 CAIA chapters worldwide and at many non-chapter locations. Some events are open to non-members. For a complete listing of events, visit the CAIA community at caia.org.
CANADA:
Wednesday, March 24: Infrastructure Panel Lunch in Toronto
A distinguished panel of experts will present a brief history of infrastructure investing in Canada and will discuss how Canadian investors (especially plan sponsors) view the space and how they are staging allocations into direct and indirect opportunities. Details will be posted soon on caia.org.
Career Event in Toronto
CAIA members and candidates had the opportunity on Wednesday, Feb. 10 to meet with executive recruiters from Robert Half Financial Services Group, Thorek/Scott and Partners, Vlaad and Company, and Options Personnel Inc. The recruiters spoke about what's happening in the job market today and what employers need to do to attract and retain key talent.
Networking Event with CVCA in Montreal
The CAIA Canada Chapter in Montreal, in collaboration with Canada’s Venture Capital & Private Equity Association (CVCA), invited CAIA members and candidates to network with Quebec’s leading venture capital and private equity professionals on Wednesday, Feb. 10.
IBERIA:
Educational Event in Madrid
Dominique Lecocq - LL.M. in Securities and Financial Regulation (Georgetown University) and Founding Partner at Lecocqassociate, spoke at an educational event in Madrid on Thursday, Feb. 11. His presentation focused on “Comparing Jurisdiction and Investment Fund Structure in Luxembourg, Ireland, Malta and the Cayman Islands – UCITS or Professional Investors Funds.”
LONDON:
Wednesday, Feb. 17: Recruiter Panel
Registration for the CAIA London educational event featuring a panel of recruiters discussing the "Prospects and Perils in 2010" is closed. Those in attendance will hear from senior recruitment and placement specialists who will share their experiences of 2009 and their views and tips for the market in 2010.
SAN FRANCISCO:
Thursday, Feb. 18: Careers Event
Caroline Ceniza-Levine - career coach, writer, speaker, and co-founder of SixFigureStart™ will talk about Job Market Perspectives for 2010. She will answer questions submitted in advance during registration or by email to member@caia.org. View details and register.
SWITZERLAND:
Friday, Feb. 26: Managed Futures Event
CAIA Switzerland is hosting a members-only event featuring Ernest Jaffarian, CEO & President of Efficient Capital Management. His presentation is titled "Managed Futures: Understanding and Maximizing the Unique Characteristics and Role in a Portfolio."
EVENTS AT NON-CHAPTER LOCATIONS:
Sydney – Thursday, Feb. 25
Melbourne – Tuesday, March 2
Milan – Thursday, March 25
Stay tuned for details on these events.
CAIA Out Front
Asset Allocation Summit
Monday, Feb.22 - Thursday, Feb. 25
Sydney, Australia
Steve Wallace, Director of Industry Relations - EMEA, will participate in a panel discussion on "The Return to Alternatives and the Criteria for Institutional Investor Mandates” on Day Two of the event.
GAIM Ops Cayman
Sunday, Feb. 28 – Wednesday, March 3
Grand Cayman
Christopher Holt, Director of Industry Relations - Americas, will be attending this CAIA-endorsed event and moderating a panel on various new “hedge fund best practices” documents from organizations such as AIMA, The President’s Working Group and the Hedge Fund Standards Board.
Global Absolute Return Congress (Global ARC) London
Monday, May 17 – Wednesday, May 19, 2010
London, UK
Christopher Holt, Director of Industry Relations –Americas, will be co-chairing the London edition of this premier event for the global alternative investment community. In addition, CAIA researchers will be providing background research on key program topics for participants at the event. Confirmed speakers include: former UK Prime Minister Sir John Major, former Canadian Prime Minister Paul Martin, former Governor of Hong Kong, Chris Patten, Harvard professor Niall Ferguson and Nobel Laureate Joseph Stiglitz. For more on this event contact organizer David Stewart at david@global-arc.net.
