Level II Overview
The shift from product knowledge to institutional asset allocation and advanced strategies.
What to Expect in Level II
If Level I was about building the vocabulary and understanding the fundamental mechanics of individual alternative asset classes, Level II is about applying that knowledge. The curriculum assumes you already know how a hedge fund charges fees and how a private equity fund calls capital. Now, you are tasked with managing a multi-asset institutional portfolio.
The Institutional Perspective
Level II forces you to think like a Chief Investment Officer (CIO). You aren’t just evaluating whether a specific venture capital fund is good; you are evaluating how a 10% allocation to venture capital impacts the liquidity, volatility, and return profile of a $5 billion endowment.
Topic Breakdown
- Emerging Topics (10%): A rotating selection of current academic and industry readings.
- Universal Investment Considerations (10%): ESG integration, regulatory frameworks, and operational due diligence.
- Asset Allocation & Institutional Investors (20%): The Endowment Model, Risk Parity, and the Norway Model.
- Private Equity (15%): Advanced topics including secondaries, co-investments, and GP stakes.
- Real Assets (15%): Unlisted infrastructure, intellectual property, and complex real estate joint ventures.
- Hedge Funds (15%): Volatility trading, tail risk hedging, and complex relative value strategies.
- Volatility & Complex Strategies (15%): VIX futures, options strategies, and structured products.
The Mental Shift
The biggest hurdle for Level II candidates is the essay section (Constructed Response). You must be able to synthesize information across topics and justify your answers. Memorizing formulas is no longer sufficient; you must understand the implications of those formulas in a portfolio context.
Recommended Free Resources
Supplemental materials to deepen your understanding of this topic.
- The definitive guide to the Level II exam structure, including the constructed response format.