CFA® Level 3 Topics and Weight

The final chapter

Apart from keeping abreast of the CFA® exam dates and the eligibility requirements, knowing the CFA topics (Level 3) is of utmost importance. But before we delve further into it, congratulations on passing the previous levels (Levels 1 and 2) of the CFA® exam and getting so close to earning your CFA charter! This also means that this will be a major turning point and a deciding factor in whether or not you qualify to join the charter. Naturally, this makes the CFA Level 3 exam a difficult nut to crack. Don't worry! We have you covered.

CFA Level 3 Exam Topics

Before you begin studying for the Level 3 exam, ensure that you have completed all of the CFA exam requirements. For the CFA Level 3 exam, the candidates will be assessed in seven different topics, including:

  1. Economics (EC)
  2. Derivative Investments (DI)
  3. Alternative Investments (AI)
  4. Ethical and Professional Standards (ET)
  5. Fixed Income (FI)
  6. Portfolio Management (PM)
  7. Equity Valuation (EV)

The weights, number of readings, and questions for each of the seven topics covered in the exam are listed in the following table:

CFA Level 3 Topics Overview
Topics Exam Weight No. of Readings No. of Questions Session Details
Economics 5-10% 3-4 8-13 SESSION 1
2 hours 15 minutes
8-11 questions
Derivative Investments 5-10% 5-10 8-13
Alternative Investments 5-10% 19-23 8-13
Ethical and Professional Standards 10-15% 31-35 17-24 SESSION 2
2 hours 15 minutes
44 questions
Fixed Income 15-20% 11-14 24-30
Portfolio Management 35-40% 24-30 36-45
Equity Valuations 10-15% 15-18 17-24

Source: CFAI

Economics (EC)

The fundamental crux of this topic is a basic understanding of micro and macroeconomic concepts, including supply and demand analysis, various market structures, economic growth and business cycles, and their impact on economic activity. Economics accounts for 5 to 10% of the Level 3 exam. The section concludes with coverage of the business cycle and its effect on economic activity.


Derivative Investments (DI)

DI builds the conceptual framework for understanding the basic derivatives and derivative markets. It also introduces essential features and valuation concepts for forwarding commitments such as forwards, futures, swaps, and contingent claims. Derivative Investments covers about 5 to 10% of the Level 3 exam.


Alternative Investments (AI)

For the Level 3 exam, AI explores hedge fund strategies, followed by a discussion of asset allocation to alternative investments. It also explores why alternative investments present risk and return characteristics uniquely different from traditional investments. AIternative investments covers about 5 to 10% of the exam.


Ethical and Professional Standards (ET)

ET explores the role of ethics in the investment profession. Through case studies, the topic illustrates the practical application of the Code of Ethics and Standards of Professional Conduct. Ethical and Professional Standards cover 10 to 15% of the Level 3 exam.


Fixed Income (FI)

For FI, candidates must understand the characteristics of various fixed-income securities and how to price them. Among the key concepts are yield measures, duration, and convexity. Fixed income questions account for about 15 to 20% of the test.


Portfolio Management (PM)

Portfolio Management covers a massive 35 to 40% of the Level 3 exam and majorly explains the fundamentals of portfolio and risk management, including return and risk measurement and portfolio planning and construction. The topic also explores risk management for individuals, portfolio management for institutional investors, and performance evaluation and investment manager selection.


Equity Valuations (EV)

EV focuses on the three significant types of equity valuation models that explore the characteristics of equity investments, security markets, and indexes and explains how to analyze industries, companies, and equity securities. EV covers about 10 to 15% of the Level 3 exam.


Note: You might notice a difference in the names of some topics. Since the change is very recent, it might be helpful for you to get briefed on the recent CFA curriculum changes.

Analyzing CFA Level 3 Topics: Important, Hardest, and Easiest

The CFAI's addition and removal of specific areas within a topic causes the intensity to change with each passing year. And while exam topics and their difficulty can be subjective at times, determining which topic is the most complex or simple is primarily based on historical candidate performance data.

Topics/Weight 2018 2019 2020 2021 2022
Economics 5-10% 5-10% 5-10% 5-10% 5-10%
Derivative Investments 5-15% 5-10% 5-10% 5-10% 5-10%
Alternative Investments 5-15% 5-10% 5-10% 5-10% 5-10%
Ethical and Professional Standards 10-15% 10-15% 10-15% 10-15% 10-15%
Fixed Income 10-20% 15-20% 15-20% 15-20% 15-20%
Portfolio Management 40-55% 35-40% 35-40% 35-40% 35-40%
Equity Valuations 5-15% 10-15% 10-15% 10-15% 10-15%

Please keep in mind that just because a topic is simple doesn't mean it can be skipped. Each topic is important and required for passing the Level 3 exam.

Level 3 Important Topics and Weight Changes

Given that the CFA Level 3 exam is one of the most important deciding factors for whether you qualify for a CFA charter or not, all topics and readings prescribed are important. Make sure not to miss a single reading while preparing. To make things a bit easier, we have boiled down our list to three topics that you might want to give special attention to:

  • Equity Valuations: The subject of equity is challenging because there is a wealth of information available on stock analysis and valuation techniques. The topic is also complex because it contains many formulas, and the candidate will be asked to perform calculations and interpretations based on them.
  • Fixed Income: Many topics might seem difficult to candidates purely because of their sheer lack of experience. Candidates who don't have prior experience with fixed-income will find the topic a bit challenging.
  • Portfolio Management: The topic's length, with approximately seven study sessions and close to fourteen readings, tests the candidates' endurance. Another difficult aspect of this topic is the amount of practice required, particularly for the essay-practice portion.

Level 3 Hardest Topics and Weight Change

As is the case for any subject in an exam, the idea of a topic being considered challenging is very subjective. The CFA Level 3 exam is challenging because it does not follow the multiple-choice structure. The constructed response approach, also known as the "essay" segment, might be challenging for CFA candidates who are accustomed to answering multiple-choice questions. It isn't easy to practice because it requires a lot of practice composing essays (which can be time-consuming).

Most of the subjects covered in CFA Level 3 are in the area of portfolio management (PM), and the order of the topics is consistent with this. The great news is that the CFA Institute has reaffirmed that there is no presumption that the candidate will approach the study sessions in any order when designing the readings for each study session. However, it is essential to remember that Level 3 differs from earlier levels because it takes a more comprehensive approach and integrates PM into most topics.

For a candidate that has minimal working finance experience, Level 3 can be difficult. For instance, the topic of asset management will be challenging for someone who has never invested. This also stands true for other issues requiring real-life experience to understand and implement correctly.

Portfolio Management and Wealth Planning are the hardest in terms of length and volume, and this subject covers a lot of readings. As a result, the length does require considerable stamina.

Level 3 Easiest Topics and Weight Change

Given the time and thought needed to complete the constructed answers, many CFA charterholders believe the Level 3 exam to be the most difficult, even though it has one of the highest average pass rates of all 3 CFA exams. Instead of trying to pinpoint the easiest topics, which are nearly impossible to decipher, let's contrast certain qualities with Level 2 (assuming you have already passed it).

The CFA Level 3 exam differs most significantly from the Level 2 exam in that it includes a constructed-response part. Because they are open-ended questions, the typical applicant will find it challenging to provide thoughtful responses as there aren't many options available. The fact that this component received lower scores than the multiple-choice portion of the exam reflects that fact.

The CFA Level 3 exam has more topic integration in a single question. Many also find that Level 3's curriculum can be more subjective than Level 2.

In conclusion, the Level 3 exam is more complex than the Level 2 exam since it has a constructed response portion and a 35–40% weighting for your knowledge of Portfolio Management and Wealth Planning.

Changes to the CFA Level 3 Curriculum

The CFAI hasn’t introduced many changes to the CFA Level 3 curriculum for 2023. It is more or less the same as in 2022. Nevertheless, here are some notable changes that must be kept in mind:

Level 3 curriculum changes (2023)
Removed Added Major Update
Behavioral Finance Perspective Private Wealth Management Application of the Code and Standards
Taxes and Private Wealth Management Integrated Cases in Risk Management: Institutional Overview of the Global Investment Performance Standards
Estate Planning in a Global Context Fixed Income
Concentrated Single Asset Positions Yield Curve Strategies and Fixed-Income Active Management
Case Study in Portfolio Management: Institutional

CFA Level 3 Topics FAQs

Currently, the CFA Level 3 exam contains approximately 35 readings spread across seven different topics. Among all the topics, Portfolio Management has by far the most readings.

The topic weights for the CFA Level 3 exam don’t change very often. The topic-weights have been more or less the same since 2019.

The following topics will require a calculator for the CFA Level 3 exam:

  1. Economics
  2. Equity Valuations
  3. Fixed Income
  4. Alternative Investments
  5. Derivative Investments

Read More About the CFA Exam

All set to appear for the CFA exam? Here’s a list of all the eligibility requirements that you need to take care of before attempting the exam.

Looking for a list of important dates and schedules for the CFA exam? Learn more about the different test windows and their deadlines.

Searching for the latest information on the CFA scoring and pass rates? Check out the most recent statistics to get a sense of how much study time you’ll need for the exam.

Looking to learn all about the CFA exam before appearing for it? Learn in detail about all the CFA levels, their frequency, and the cost involved.

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