CFA® Curriculum Changes
One of the biggest concerns the candidates face during their annual CFA preparation is the amount of time spent analyzing the recent CFA curriculum changes. But why does the CFA® Institute (CFAI) often change the curriculum?
Each year, the CFA Institute updates the exam material to reflect the ever-changing landscape of investment management and the market in general. Naturally, this raises the need to keep up with curriculum changes. Knowing what has changed and whether topic weights have been updated is critical when selecting study resources and ensuring that you only prepare what is required. This is especially important if you failed the CFA exam last year and don't know what to do next. But why are curriculum changes such a big deal?
Why Is Knowing the Curriculum Changes Important?
Knowing the curriculum changes ahead of time is beneficial in many ways. Aside from assisting candidates in understanding the importance of each topic for the exams, students looking to get a head start before the 2023 exam can see these changes in advance of their study preparations.
But in some cases, knowing the changes is of greater importance, especially if you are:
- A Deferring Candidate
Candidates who have been deferred will be tested on the new curriculum (2023). Knowing the changes can help them focus on what is required and eliminate readings that will no longer be included. Not only will this save them a lot of money, but it will also be a huge plus to their study schedule.
- A Returning Candidate
Candidates who have failed previous exams will be subjected to a retest using the new curriculum. Knowing about the curriculum changes can help them focus on the new learning objectives and disregard those that have been wiped out. Needless to say, a better understanding of the curriculum will help them score better on the CFA exam.
Changes to the CFA Curriculum
The CFA Institute typically updates its curriculum annually. Although the epidemic disrupted the Institute's curriculum in 2021, it did not change its course offerings. Despite this, the 2022 curriculum has undergone a considerable overhaul, and the subsequent changes will most possibly be carried out in 2023.
Updated Topic Names
Along with the changes that CFAI incorporates to the readings in each topic, specific tweaks have also been brought into the topic names. This change could either be made to update the name with the revised readings or simplify the terms.
| Old Reading Name | New Reading Name |
|---|---|
| Quantitative Methods | Quantitative Methods (QM) |
| Economics | Economics (EC) |
| Financial Reporting and Analysis | Financial Statement Analysis (FSA) |
| Corporate Finance | Corporate Issuers (CI) |
| Equity Investments | Equity Valuation (EV) |
| Fixed Income | Fixed Income (FI) |
| Derivative Investments | Derivative Investments (DI) |
| Alternative Investments | Alternative Investments (AI) |
| Portfolio Management | Portfolio Management (PM) |
| Ethical and Professional Standards | Ethical and Professional Standards (ET) |
| * Please note that the ones with background color are the updated names | |
Source: CFAI
Curriculum Changes for Each Level
CFAI has made minor changes to the readings at each level, with a difference of about two to three topics. In 2022 many readings were updated from 2021 and will most possibly be carried out in 2023. Here's a look at the changes in each level:
CFA Level 1 Curriculum changes
The CFAI updates the material covered in the CFA® exam annually to keep up with current topics and challenges that professionals in the investment management industry face. The CFA curriculum for 2022 was updated from 2021, as represented by the CFA Institute’s learning outcome statements (LOS). There have been some minor updates to the Level 1 curriculum, but nothing major. Some of them include:
- The environmental, social, and governance (ESG) coverage at Level 1 has been updated and expanded to include the most recent developments and their impact on investment management.
- The Quantitative Methods topic area has been updated to be more engaging and digitally friendly. It now includes code snippets and Excel commands to help with data presentation.
- Fixed income readings have been updated across all levels to ensure readability and consistency.
- The Alternative Investments readings have been revised to include a new introductory reading.
Other revisions and additions include:
| Level 1 Curriculum Changes (2022) | ||
|---|---|---|
| Topics | Revisions | Additions |
| Quantitative Methods | Probability Concepts, Common Probability Distributions, Sampling and Estimation, and Hypothesis Testing | Organizing, Visualizing, and Describing Data and Introduction to Linear Regression. |
| Economics | Aggregate Output, Prices, and Economic Growth | Understanding Business Cycles |
| Financial Statement Analysis (Earlier known as Financial Reporting and Analysis) | Non-Current (Long-Term) Liabilities | |
| Corporate Issuers(Earlier known as Corporate Finance) | Uses of Capital, Sources of Capital, and Cost of Capital—Foundational Topics | |
| Fixed Income | Introduction to Asset-Backed Securities and Understanding Fixed-Income Risk and Return | |
| Alternative Investments | Investing Methods, Fee Structures, and Performance Appraisal | |
| Portfolio Management and Wealth Planning | Technical Analysis | The Behavioral Biases of Individuals |
| Ethical and Professional Standards | Introduction to the Global Investment Performance Standards | Ethics Application |
CFA Level 2 Curriculum Changes
Like the Level 1 exam, the CFA Level 2 exam curriculum hasn’t changed much since 2021.
Some revisions, additions, and the major updates include:
| Level 2 Curriculum Changes (2022) | ||
|---|---|---|
| Removed | Added | Major Updates |
| Excerpt from “Probabilistic Approaches: Scenario Analysis, Decision Trees, and Simulations | Backtesting and Simulation | Environmental, Social, and Governance (ESG) Considerations in Investment Analysis |
| Publicly Traded Real Estate Securities | Mergers and Acquisitions | |
| Capital Budgeting | ||
| Real Estate Investments | ||
| Pricing and Valuation of Forward Commitments | ||
Apart from these, here are some other minor changes:
- Machine learning has been updated to apply to a variety of data cases related to investment problems.
- The revised Backtesting and Simulation reading introduces these tools’ evaluation and comparison of investment strategies’ strengths and weaknesses.
- Corporate Finance has been renamed Corporate Issuers, focusing on understanding the motivations, interactions, and effects of corporate securities on investors. Corporate issuers combine fundamental areas such as Economics and Financial Statement Analysis to provide a foundation for Equity Valuation and Fixed Income.
- Fixed Income readings were revised across all levels to improve readability and consistency.
- The readings for Alternative Investments have been updated to include a single reading on Real Estate and revisions to Private Equity.
CFA Level 3 Curriculum Changes
The Level 3 curriculum did not see much change this year (compared to last year).
Some notable changes:
- Fixed Income readings were revised across all levels to align for ease of reading and consistency: Notation simplification and alignment; elimination of duplication; updating concepts such as LIBOR to Market Reference Rates; and a complete revision of the challenging Yield Curve Strategies and Credit Strategies readings.
- Revisions to Private Wealth Management, Institutional Investors, and Performance Evaluation to reflect the 2020 GIPS standards.
Other revisions, additions, and the major updates include:
| Level 3 Curriculum Changes (2022) | ||
|---|---|---|
| Removed | Added | Major Update |
| Professionalism in the Investment Industry | Integrated Cases in Risk Management: Institutional | Yield Curve Strategies |
| The Behavioral Finance Perspective | Fixed-Income Active Management: Credit Strategies | |
| Taxes and Private Wealth Management in a Global Context | Topics in Private Wealth Management | |
| Estate Planning in a Global Context | Overview of the Global Investment Performance Standards | |
FAQs
Who Makes Changes to the CFA Curriculum?
Only the CFAI makes any changes to the CFA curriculum. The institute does this to stay up-to-date with current topics and challenges that the professionals in the investment management industry face.
How To Stay Updated With the Latest CFA Curriculum Changes?
The CFA Institute’s curriculum for the CFA Exam is updated annually and can be found on the CFAI website, which candidates can easily access.
How Often Does the CFA Curriculum Change?
There’s no clear guideline regarding the frequency of the syllabus being changed. Typically about 2-5% of the syllabus gets changed over a year. A good start would be comparing the LOSs over the span of two years.
Read More About the CFA Exam
Are you worried about upcoming exam dates? For those confused by the changing timetables, here is a handy summary of new dates and frequencies for 2022–2023.
Looking for the most up-to-date information on CFA scoring and pass rates? Check out the most recent statistics to know how much time you’ll need to study for the exam.
Want to know more about the eligibility criteria to sit for the CFA exam? Learn more about the eligibility, enrollment criteria, and all the deadlines.
Looking to learn more about the prerequisites for the CFA exam? Here is a detailed read regarding the registration criteria and the rest of the costs involved.