After launching consulting arms supporting institutional investors and asset managers earlier this year, the Edhec Risk and Asset Management Research Centre has now begun offering Executive Education under the Edhec Alternative Investment Education banner. What is the rationale for this initiative?

Frédéric Ducoulombier: Since its inception, the Edhec Risk and Asset Management Research Centre has been carrying out advanced research work with the backing, and for the benefit of, the industry. Some of the sponsors and contacts implementing our approaches and recommendations have expressed a need for support through advisory services and training of personnel; by setting up dedicated consulting and executive education arms, the Edhec Risk and Asset Management Research Centre is upholding its mission to serve the asset management community.

EDHEC Business School has a century old tradition of serving the educational needs of businesses and has spelled out its credo as ‘developing the professional through research based excellence.’ It is thus natural to bring the fruit of the vanguard research conducted by the Edhec Risk and Asset Management Research Centre into graduate and executive education programmes. While the school is launching a new MSc programme to deliver freshly minted graduates equipped with a solid understanding of the latest advances in risk and asset management, the Centre has created Edhec Alternative Investment Education, an executive education arm whose mission is to help professionals upgrade their skills to meet the challenges and seize the opportunities of the rapidly expanding alternative investment universe.

What are these challenges that you mention?

Frédéric Ducoulombier: Explosive growth in the funds flowing into alternative investments, institutional investors’ increased appetite for the various alternative vehicles and calls for greater regulation of hedge funds have heightened the need for professional standards within an industry whose landscape is diverse, complex and rapidly evolving.

Many consultants and analysts working in the industry primarily have a background in traditional investments and were – or are being – trained on the job. We are also seeing advisers and managers who established a reputation in one alternative investment category expand into completely different segments by adding other alternative vehicles to their product offering.

There is no question about the amount of talent and brains out there or the value which lateral moves and scope expansion can create. That said, a strong background and time-tested experience in real estate is not adequate training for a hedge fund manager, and the reasoning is true even for alternative vehicles that may appear similar on the surface: the knowledge base and skills required for implementing event-driven strategies are quite different from the requirements for managing a global-macro fund.

An expanding industry needs an expanding base of professionals serving customers but there is a risk to the community if knowledge and skills are allowed to lag behind. The alternative investment industry needs trusted professional standards that demonstrate mastery of the fundamental concepts and tools for managing assets across the whole spectrum of alternatives, as well as venues allowing professionals to keep up with the rapid pace of innovation.

How do you expect to contribute to promoting these high professional standards?

Frédéric Ducoulombier: I believe the Edhec Risk and Asset Management Research Centre has been contributing to the establishment and promotion of higher professional standards! In parallel to conducting its applied research programmes, the Centre has surveyed industry practices and taken stock of the application of academic advances within European asset managers; its staff have collaborated with professional associations to define the curricula of certification programmes; and the Centre has participated in discussions on regulatory changes and initiated consultations on the evolution of industry practices. The Centre has also provided venues for dialogue with professionals such as the edhec-risk website or the EDHEC Hedge Fund and EDHEC Asset Management Days.

The creation of EDHEC Alternative Investment Education is further testimony of these orientations and this is clearly reflected by our product range: we offer preparatory solutions for the Chartered Alternative Investment Analyst^SM examinations, organise open-enrolment hedge-fund training and design and deliver custom programmes for institutional clients.

Let us focus on your products. What’s in CAIA ^SM and what type of support do you offer candidates?

Frédéric Ducoulombier: The Chartered Alternative Investment Analyst ^SM designation is the first and only global educational standard for the alternative investment industry. The CAIA ^SM charter certifies an individual’s mastery of the concepts, tools and practices essential for managing traditional and modern alternative vehicles. Candidates must pass two levels of exams and have at least one year of financial experience. The Level I exam covers basic analytical tools and fundamentals of alternatives; Level II concentrates on institutional portfolios, risk management in the alternative sphere and advanced topics. Both levels incorporate issues of ethics and professional conduct. These two exams can be taken six months apart offering candidates a rapid return on investment.

CAIA programme graduates explain that they have developed a bird’s eye view of the industry, have been able to cross-fertilise knowledge from the various alternative segments and enjoy the benefits of an independent certification of their skills.

The Chartered Alternative Investment Analyst Association has selected EDHEC Business School, as its exclusive official provider of CAIA exam preparatory courses for Europe. As such, we provide candidates with solutions to leverage their study efforts and allow them to take the tests with the best chance of success.

Our offering for the February 2005 CAIA examinations is centered on intensive review seminars organised in London, Geneva and Paris. Designed and delivered by experienced professionals, these seminars provide candidates with important insights for the exams. Participants in our seminars receive study notes which cover all CAIA reading and help them to focus their review efforts. We also distribute test preparation software allowing candidates to take simulated CAIA exams.

What is the profile of these CAIA ^SM candidates and who are your clients?

Frédéric Ducoulombier: CAIA candidates come from 35 countries and include new industry participants seeking to establish a solid understanding of alternative investments, traditional asset managers wishing to explore alternatives as an additional class for their portfolios, and seasoned alternative professionals who want to assimilate the latest research advances or understand the alternative vehicles they have not been covering.

Our clients and prospects list is very diverse, showing that the programme appeals to a remarkable variety of professionals and institutions. Functions represented include Fund Managers and Directors; Analysts, Consultants and Research Heads; Product, Marketing and Sales Managers; Lawyers; as well as CEOs.

These professionals represent Hedge Funds, CTAs, Asset Allocation Advisors, Funds of Funds, Asset Management Organizations, Private Banks, Venture Capital Firms and Institutional Investors.

We are recording interest from old-timers and new-comers, from alternative investment boutiques and asset management or investment banking giants. Most of our clients work in the United Kingdom, Switzerland, France, Italy and Germany but we are also serving CAIA candidates in Spain and Benelux.

So far, chief officers and fund managers represent the majority of participants enrolled in our seminars. In our experience to date, European institutions sponsor individual rather than group registrations; however, several of our contacts are contemplating making the CAIA designation a requirement for both managers and sales to guarantee a level of competence to their customers, to demonstrate their dedication to the industry and to set themselves apart from their competitors.

Just as money has been flowing into alternative investments, all sorts of course providers have been entering the market, promising to shed light on the mysterious world of Hedge Funds… are you going to be any different?

Frédéric Ducoulombier: It is true that a number of financial training companies, business schools and individuals have been offering hedge fund courses and that some deserve credit. We will naturally promise to enlighten participants in our courses, but there are three key reasons why we can credibly say that we will offer a different experience.

Firstly, the Edhec Risk and Asset Management Research Centre has proved its dedication to the industry by systematically including alternatives in its research on asset allocation and by leading high profile initiatives such as the Edhec European Alternative Multi-management Practices Survey, the annual EDHEC Hedge Fund Day or the EDHEC Alternative Indices. The reputation that EDHEC Business School has earned in the alternative investment industry is demonstrated by the Centre’s partnerships and has led the CAIA Association ^SM to handpick Edhec Business School to become its sole course provider in Europe.

Secondly, while the Hedge Fund programmes currently found on the market deal with fundamentals and the big picture, EDHEC AI Education will be offering an open-enrolment course at the intermediate level aimed at developing practical skills. Our one day programme will equip participants with a workable knowledge of the techniques that should be part of the toolkit of anyone investing in hedge funds or advising private and institutional clients on the inclusion of hedge funds in their portfolios.

Last but not least, our Hedge Fund courses will be designed by François-Serge Lhabitant, associate professor at EDHEC Business School and senior advisor to Kedge Capital Partners. Dr. Lhabitant has a substantial experience of hedge funds as a former member of the senior management of Union Bancaire Privée where he headed the quantitative analysis and portfolio management activities of the alternative asset management group. He is also an excellent teacher and the celebrated author of global bestsellers on alternative investments.

Your structure will be organising the annual EDHEC OLYMPIA Alternative Investment Summer Camp; can you tell us more about this event and about your custom programmes in general?

Frédéric Ducoulombier: The EDHEC OLYMPIA Alternative Investment Summer Camp is a €150,000 initiative aimed at helping young talents from Europe and Africa discover the world of hedge funds. The first edition will take the form of a week-long intensive course on the fundamentals of hedge funds, featuring lectures and workshops by academics and practitioners. 25 outstanding students will be selected to take part in this exclusive programme and will be awarded scholarships. The principal is Olympia Capital Management who has made this ambitious programme possible through a generous donation.

We expect that most custom programmes will be centered on internal training needs and will be shorter and more advanced. However, the EDHEC OLYMPIA AI Summer Camp is a good illustration of our ability to tailor-make training courses according to the requirements of clients.

* Frédéric Ducoulombier is an associate professor at EDHEC Business School and the Director of EDHEC AI Education. Prior to joining the team, Frédéric Ducoulombier headed EDHEC Business School’s M.Sc. programmes and managed the finance track of its MBA.