2027 CFA Level III Core Curriculum: Reading List and Summaries

There are no changes to the learning outcomes in the 2027 Level III core curriculum. Every core learning outcome is word-for-word the same as in 2026. The one update is in Ethics, which has been reorganized and refreshed to reflect the latest edition of the Standards of Practice Handbook (details below). Topic weights are also unchanged.

Topic weights for the 2027 Level III exam:
Asset Allocation: 15–20%
Portfolio Construction: 15–20%
Performance Measurement: 5–10%
Derivatives and Risk Management: 10–15%
Ethical and Professional Standards: 10–15%
Core Subtotal: 65–70%

Pathway (Portfolio Management, Private Markets or Private Wealth): 30–35%

Why the core matters most
The core makes up 65–70% of the total exam weight, whichever pathway you choose. Your pathway is 30–35%. Every candidate sits the same core, so mastering it is the single most important part of your preparation. A strong pathway score cannot make up for a weak core.

ASSET ALLOCATION (15–20%)

  1. Capital Market Expectations, Part 1: Framework and Macro Considerations
    Building a capital market expectations framework, with growth trends, business cycles, inflation, monetary and fiscal policy, and the yield curve as economic inputs.

  2. Capital Market Expectations, Part 2: Forecasting Asset Class Returns
    Setting return expectations for fixed income, equity, real estate and currencies, forecasting volatility, and assessing emerging market risks.

  3. Overview of Asset Allocation
    Investment governance, the economic balance sheet, asset-only vs. liability-relative vs. goals-based approaches, and strategic implementation and rebalancing.

  4. Principles of Asset Allocation
    Mean–variance optimization and its limits, Monte Carlo simulation, risk budgets, liability-relative and goals-based allocation, heuristics, and rebalancing policy.

  5. Asset Allocation with Real-World Constraints
    How size, liquidity, time horizon, regulation, taxes and behavioural biases shape allocation, and how to revise an allocation when circumstances change.

PORTFOLIO CONSTRUCTION (15–20%)

  1. Overview of Equity Portfolio Management
    The roles of equities, segmenting the investment universe, costs and income, shareholder engagement, the active–passive spectrum, and benchmark choice.

  2. Overview of Fixed-Income Portfolio Management
    The roles of bonds, risk and return measures, liquidity, a fixed-income return model, leverage, taxable vs. tax-exempt investors, liability-driven investing (LDI), cash-flow matching and laddered portfolios.

  3. Asset Allocation to Alternative Investments
    The roles of alternatives, defining the opportunity set, suitability, allocation approaches, liquidity planning and monitoring.

  4. An Overview of Private Wealth Management
    Human vs. financial capital across life stages, taxes and inflation for individuals, and drafting an investment policy statement (IPS) for a private client.

  5. Portfolio Management for Institutional Investors
    Defined benefit (DB) pension plans, sovereign wealth funds, endowments, foundations, banks and insurers: their stakeholders, liabilities, constraints and investment policy statements.

  6. Trading Costs and Electronic Markets
    Measuring execution costs (effective spread, volume-weighted average price (VWAP), implementation shortfall), electronic trading, market fragmentation, low-latency traders and market abuse.

  7. Case Study in Portfolio Management: Institutional (SWF)
    Financial, environmental and social risks in a sovereign wealth fund (SWF) strategy, risks from long-term direct investments, and evaluating an enterprise risk management (ERM) system.

PERFORMANCE MEASUREMENT (5–10%)

  1. Portfolio Performance Evaluation
    Return and risk attribution, benchmark types and quality, appraisal and drawdown measures, and evaluating manager skill.

  2. Investment Manager Selection
    The due diligence process, Type I and Type II errors in hiring and firing, style analysis, capture ratios, pooled vs. separate accounts, manager contracts and performance-based fees.

  3. Overview of the Global Investment Performance Standards
    The scope of the Global Investment Performance Standards (GIPS), firm definition and discretion, return calculation and composite rules, presentation and reporting, and verification.

DERIVATIVES AND RISK MANAGEMENT (10–15%)

  1. Options Strategies
    Covered calls, protective puts, spreads, straddles, collars and calendar spreads, volatility skew and smile, and using options to target equity exposure.

  2. Swaps, Forwards, and Futures Strategies
    Using interest rate, currency, equity and volatility derivatives to modify risk and return, rebalance, and infer market expectations.

  3. Currency Management: An Introduction
    Strategic hedging choices, active currency strategies, adjusting hedge ratios with forwards and foreign exchange (FX) swaps, cost-reduction trades, cross-hedges and macro-hedges, and emerging market currencies.

ETHICAL AND PROFESSIONAL STANDARDS (10–15%)

  1. Code of Ethics and Standards of Professional Conduct
    The Professional Conduct Program, the disciplinary process, and the responsibilities under each Standard.

  2. Guidance for Standard I: Professionalism

  3. Guidance for Standard II: Integrity of Capital Markets

  4. Guidance for Standard III: Duties to Clients

  5. Guidance for Standard IV: Duties to Employers

  6. Guidance for Standard V: Investment Analysis, Recommendations, and Actions

  7. Guidance for Standard VI: Conflicts of Interest

  8. Guidance for Standard VII: Responsibilities as a CFA Institute Member or CFA Candidate
    Each of these readings applies its Standard to practical situations and recommends procedures to prevent violations.

  9. Application of the Code and Standards: Level III
    Evaluating conduct and policies against the Code and Standards and explaining whether they violate them.

  10. Asset Manager Code of Professional Conduct
    The purpose of the Asset Manager Code, its six General Principles, and assessing a firm's compliance.

What changed in Ethics for 2027
In 2026, the guidance on all seven Standards was a single reading. In 2027, it is split into seven separate readings, one per Standard, each with its own practice problems. The learning outcomes are unchanged. However, CFA Institute has updated the Ethics readings at all levels to fully reflect the 12th edition of the Standards of Practice Handbook, including new guidance for each Standard.

My recommendation: read Ethics from the official CFA Institute curriculum, not from prep provider notes. Historically, prep notes have summarized Ethics poorly, and the nuance in the guidance and examples is exactly what gets tested. Ethics deserves your full attention for two reasons. At 10–15% of the exam, it carries a high weight. More importantly, it is the core set of instructions on how to be a professional who acts with integrity.

A reminder on new and restructured material
Restructured or new material is no more or less likely to be tested than anything else in the curriculum. Every learning outcome is fair game.