Alternative investment strategies, performance measurement, and suitability due diligence.
Chapter 21 moves from alternative product structure to alternative strategy use and evaluation. It explains the main alternative strategies, the limits of traditional performance measures, and the due-diligence and suitability work required before these products can be recommended.
This chapter matters because alternatives are often sold on narrative rather than on disciplined analysis. The exam is more likely to reward clear thinking about strategy risk, liquidity, and client fit than enthusiasm for headline returns.
Exam Focus
Distinguish major alternative strategies by source of return, leverage, liquidity, and directional exposure.
Use risk-adjusted and context-based performance measures rather than relying on raw return alone.
Apply due-diligence and suitability standards to alternative products with the same rigor used for any other recommendation.