What is a CARVE-OUT?

CFA Level III
#1

Can anyone clearify for me what are carve-outs?

GIPS are giving me so much trouble.

Thanks

#2

say using the us equity returns from broad equity portfolios to represent a us equity composite. off the top of my head I don’t think its allowed anymore but when it was you had to allocate a proportional amount of cash. maybe stopped in 2010?

#3

Refer to the link below:

http://www.gipsstandards.org/standards/guidance/Documents/Comments/gs_treatment_of_carve_outs_clean.pdf

#4

if you have a multi-class composite and you want to show performance for equities portion within that compisite, you now have to have equities in a separate account / sub-account with its own cash balances

#5

This is the best explanation I have seen so far.

Thanks for sharing, Dal

#6

Yes, thanks for that DAL