Chartered Alternative Investment Analyst Association (CAIA) Practice Exam

Which category includes public real estate and equities dominated by stable positions in real assets?

1. Private Equity

2. Hedge Funds

3. Public Real Assets

4. Structured Products

The correct answer is: Public Real Assets

The category that includes public real estate and equities dominated by stable positions in real assets is Public Real Assets. This area encompasses investments in tangible assets that can generate stable cash flows, such as real estate and infrastructure. Public real estate investment trusts (REITs) are a primary example, as they allow investors to gain exposure to the real estate market through publicly traded shares. Public Real Assets typically have lower correlation with traditional equity markets and can serve as a hedge against inflation, as they provide intrinsic value tied to real world assets. The focus here is on stability and long-term income generation from physical assets, which is distinct from the riskier or more fluid investment strategies found in categories like Private Equity or Hedge Funds. Each of those categories tends to involve higher levels of complexity, active management, or private ownership that do not align with the characteristics of public real asset investments. Structured Products, on the other hand, are designed to meet specific investment needs and are not focused on real estate equity or stable positions in real assets.