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CII AF4 exam: what gets examined?

If you are preparing for the CII’s AF4 exam, Investment planning, here’s what you need to know about the exam and what has been tested in the past.

What does the AF4 exam look like?

The CII AF4 exam is 3 hours long written exam paper. It consists of 3 case studies – one worth 80 marks and two smaller ones that are worth around 40 marks each (the number of marks can vary slightly from one exam to another).

The main case study will typically have 12-18 questions (or part questions) in total. The two smaller case studies typically have 8-10 questions (or part questions). Overall, the paper will have 160 marks and you will normally need around 88 marks to pass. This pass mark applies to the overall exam so you could bomb on one of the smaller case studies and still pass if you get the marks elsewhere.

How easy is it?

The simple answer is ‘not very’. Based on the latest published CII results, the pass rate for AF4 is only 50% making it the second hardest AF exam subject.

What is the CII AF4 exam all about?

Be warned. You may find that AF4 doesn’t closely resemble your day to day job – even if you regard yourself as a bit of an investment guru. Historically, every AF4 paper has included some form of analysis of direct investments (usually equities, sometimes gilts). You should be prepared to take on the likes of P/E ratios, ROCE and return on equity. To be fair, the marks awarded for these areas has reduced over past exams but as ever with investments, past performance is no guide to future performance!

Also remember that it will test widely across the investment landscape – anything from investing in gold, OEIC diversification rules, EIS, MPT, contrarian investment style, to M0 and M4 money supply

The last published paper (as at July 2022) was the May 2022 CII AF4 exam paper. This is the last published paper and it was a typical paper.

What historically gets tested in the CII’s AF4 exam?

Like many CII AF exams, if you look at enough exam papers over a long enough period, you’ll spot some common themes and trends. This is NOT the same as saying you can predict what will be in the AF4 exam you sit, but it can provide a useful focus when studying.

An analysis of past AF4 exam papers shows that it is highly likely that you will be examined in the following areas:

• Performance measurement, e.g. sharpe and information ratios
• Direct investments, e.g. property, equities and FI
• Equity ratios, e.g. dividend yield, P/E earnings, ROCE, dividend yield, NAV
• Indirect investments, e.g. OEIC, IB’s, EIS, VCTs
• Passive investments, ETFs and benchmarks

Areas frequently tested historically:

• Alpha and beta
• Investment theories, e.g. MPT, CAPM
• Macro economics, e.g. M0 and M4; business cycle
• Making client recommendations
• Risk and capacity for loss
• Investment styles, e.g.  value, momentum, GAARP

Other tested areas:                                                                    

• Investment advice process
• Risk profiling
• Analysing company accounts
• Time value of money
• Platforms

How do I use this to prepare for the AF4 exam?

1. Familiarising yourself with the CII’s AF4 exam should be a key element of your preparation. Don’t just read past exam papers, complete at least two of them UNDER EXAM CONDITIONS.
2. With your revision, as a minimum, make sure you know your stuff on the key topics. You should aim to have a good overall knowledge across the syllabus – our audio book will help you to learn around your work or family commitments.
3. Be smart with your revision. Try using Brainscape electronic memory cards. Click here for details.

Related blogs: Top tips to pass an AF exam first time. Click here

Prepare well and be successful.

Ian Patterson

Author of the CF8, J07 and AF6 CII study texts, ex-examiner