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It’s a portion of a multi-strategy portfolio used to demonstrate performance of an individual asset class/sector/etc. So if you had a balanced strategy of equity, bonds, cash you could “carve out” the equity portion to look at its performance separate from the overall strategy. Or if you had an equity portfolio, you could look at the performance of an Industrials Sector Carve Out. But after 1/1/10, cannot include the carve out in a composite unless it also has a cash position and is managed separately.
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From the GIPS glossary:
A portion of a portfolio that is by itself representative of a distinct investment strategy. It is used to create a track record for a narrower mandate from a multiple-strategy portfolio managed to a broader mandate. For periods beginning on or after 1 January 2010, a carve-put must be managed separately with its own cash balance.
Thanks. Haven’t read much in GIPS, learnt most of what i know through Q&A. GIPS is boring