CFA® Level 3 New Topics Latest Outline

The CFA® Level 3 exam has been revised to align more closely with the evolving demands of the financial industry and focus on high-level decision-making skills and strategic portfolio management. The updated syllabus introduces new topics and adjusts the weights of existing sections to prepare you for real-world challenges in investment management.
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Here's a closer look at the latest curriculum enhancements and what you can expect in the upcoming exam cycle.

CFA Level 3 Latest Topics and Weights

The updated CFA Level 3 curriculum is strategically designed for advanced financial roles, emphasizing key focus areas and refined topic weights. In addition to the core curriculum, it introduces a choice of specialized pathways covering 30%- 35% of the curriculum, ensuring you are equipped for specialization and leadership in the finance industry.

Topic Topic Name Weight
1 Asset Allocation 15%-20%
2 Portfolio Construction 15%-20%
3 Performance Measurement 5%-10%
4 Derivatives and Risk Management 10%-15%
5 Ethical and Professional Standards 10%-15%
6 Pathways 30%-35%

Overview of the New CFA Level 3 Exam Topics

Each CFA Level 3 core curriculum topic is designed to deepen your understanding of various critical aspects of financial analysis and portfolio management.

Asset Allocation (15%-20%)

The Asset Allocation segment of the CFA Level 3 core curriculum comprehensively explores various strategies and analytical methods for managing and optimizing portfolios. 

This section aims to deepen your understanding and abilities in several key areas:

  1. Capital Market Expectations: Examines how to develop and critique capital market forecasts, integrating economic trends and policy impacts.
  2. Forecasting Asset Class Returns: Focuses on methodologies for projecting returns across various asset classes and adjusting portfolios based on macroeconomic shifts.
  3. Principles of Asset Allocation: Explores different strategies, including asset-only and liability-relative approaches, emphasizing tools such as mean-variance optimization and scenario analysis.
  4. Asset Allocation with Real-World Constraints: Address practical considerations such as liquidity needs and regulatory impacts on portfolio adjustments and rebalancing.

The curriculum ensures you are equipped with the theoretical knowledge necessary for effective investment governance and practical skills for applying these principles in real-world scenarios, preparing you for advanced roles in financial strategy and portfolio management.

Portfolio Construction (15%-20%)

The Portfolio Construction segment of the CFA Level 3 curriculum encompasses a broad range of strategies and considerations for managing diverse investment portfolios. Key areas include:

  1. Equity Portfolio Management: Explores the integration of equities in portfolios, segmentation of investment universes, and the effects of ownership costs and shareholder engagement on performance.
  2. Fixed-Income Portfolio Management: Discusses the role of fixed-income securities, portfolio risk and return measures, liquidity effects, leverage implications, and strategies for taxable and tax-exempt investors.
  3. Asset Allocation to Alternative Investments: Focuses on the strategic placement of alternative investments in portfolios, discussing their roles in return and risk management and considerations in investment and liquidity planning.
  4. Private Wealth Management: Evaluates the dynamics of personal wealth, including the creation and distribution of wealth, the impact of life stages on financial decisions, and investment strategy formulation for private clients.
  5. Institutional Investor Management: Addresses the unique characteristics and policy formulation of institutional investors, including pension plans, sovereign wealth funds, and university endowments, with a focus on risk management and regulatory considerations.
  6. Trading Costs and Electronic Markets: Examines the components of trading costs, the evolution of electronic trading systems, market fragmentation, and regulatory responses to trading risks and abuses.
  7. Case Study in Portfolio Management (Institutional SWF): Analyzes the financial and non-financial risks of sovereign wealth fund (SWF) strategies, discussing long-term investment management and risk mitigation methods.

Each section is designed to provide you with a deep understanding of portfolio management's theoretical and practical aspects across various types of investments and investor profiles.

Performance Measurement (5%-10%)

The Performance Measurement section of the CFA Level 3 curriculum covers comprehensive methodologies for evaluating investment performance. Key areas include:

  1. Portfolio Performance Evaluation: Explores the interrelated components of performance evaluation: measurement, attribution, and appraisal. This includes understanding different attribution methods (return, risk, macro, micro), interpreting fixed-income analyses, and evaluating benchmark quality and specification.
  2. Investment Manager Selection: Focuses on the selection and evaluation of investment managers, including due diligence, style analysis, and understanding behavioral factors in decision-making. It also covers evaluating performance-based fees and the contractual aspects of manager engagements.
  3. Overview of the Global Investment Performance Standards (GIPS): Reviews the objectives, scope, and compliance requirements of the GIPS standards, focusing on return calculation methodologies, composite construction, and the verification process.

Each section is designed to equip you with the skills needed to accurately assess the quantitative and qualitative aspects of investment performance, which is essential for effective portfolio management and investment manager selection.

Derivatives and Risk Management (10%-15%)

The Derivatives and Risk Management section of the CFA Level 3 curriculum is designed to equip you with advanced strategies for leveraging derivatives to manage portfolio risks and enhance returns. Key areas include:

  1. Options Strategies: Explores a range of options strategies such as covered calls, protective puts, and spreads, focusing on their structures, payoffs, risks, and break-even points. It also discusses the implications of volatility effects and the strategic use of options for managing equity risk exposures.
  2. Swaps, Forwards, and Futures Strategies: Covers the use of interest rate, currency, and equity derivatives to modify portfolio risk and return, including the practical application of volatility derivatives and variance swaps for targeted risk management.
  3. Currency Management: Analyzes the effects of currency movements on portfolio performance, strategic choices in currency management, and using derivatives to adjust hedge ratios and manage risks in foreign currency portfolios.

Each section provides a detailed understanding of how derivatives can be applied in real-world financial scenarios to optimize investment outcomes and mitigate risks.

Ethical and Professional Standards (10%-15%)

The Ethical and Professional Standards section of the CFA Level 3 curriculum focuses on reinforcing the importance of ethical practices and professionalism in finance. In addition to the material presented at Levels 1 and 2, the Asset Manager Code of Professional Conduct adds ethical standards specifically for asset managers. Key areas include:

  1. Code of Ethics and Standards of Professional Conduct: Discusses the structure and enforcement of the CFA Institute's ethical guidelines, emphasizing the ethical responsibilities mandated by the Code and Standards.
  2. Guidance for Standards I–VII: Enhances the application of the CFA Institute Code and Standards through interpretation and scenario analysis, recommending preventive practices against violations.
  3. Application of the Code and Standards: Level III: Evaluates compliance with the CFA Code and Standards in practical settings, highlighting real-world applications and identifying ethical breaches.
  4. Asset Manager Code of Professional Conduct: Explains the purpose and principles of the Asset Manager Code, assessing consistency in asset management practices, and suggesting methods to prevent ethical violations.

This section is designed to deepen your understanding of ethical decision-making and adherence to professional conduct in the field of finance.

Specialized pathways (30%-35%)

With the introduction of specialized pathways, the curriculum now allows you to tailor your learning to specific career interests within the financial sector. There are now 2 new pathways in Private Wealth and Private Markets, plus the traditional Portfolio Management path. You will be able to select a path that teaches content more directly related to your interests and aspirations. The 3 versions will share the common core of the curriculum, supplemented by specialized content for each pathway.

Frequently Asked Questions

In 2025, the CFA Level 3 exam introduces the specialized pathways, a significant enhancement to the core curriculum designed to better prepare candidates for specialized finance roles.

Yes. The syllabus for CFA Level 3 has been updated to reflect new topics and specialized pathways, focusing more on practical and strategic aspects of financial management.

The new specialized pathways include Portfolio Management, Private Markets, and Private Wealth, each designed to cater to specific professional specializations within finance.

You should focus on the updated topics and pathways, utilizing the latest study materials and resources provided by the CFA Institute.

The 2025 updates bring a refined focus to the CFA curriculum, particularly at Level 3, with new topics and pathways to equip candidates for advanced challenges in the financial sector.

References

CFAI Official Website: https://www.cfainstitute.org/en/programs/cfa/curriculum/study-sessions

CFA® Level 1 Topics

Discover the foundational finance and investment concepts covered in the Level 1 exam.

CFA® Level 2 Topics

Delve into complex financial analysis and asset valuation as covered in the Level 2 exam.

CFA® Level 3 Topics

Master advanced portfolio management techniques with the newly revised Level 3 curriculum.

CFA® Exam Curriculum and Changes

Stay informed about the latest curriculum updates across all levels of the CFA exam to better prepare for your certification journey.

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