what the GIPS is a carve-out? please, somebody, english

brain_wash_your

Can somebody please explain in plain english?
Thanks

oneboy

My understanding--

Say account XYZ ($1 million) contains three sub-accounts Equity(60%) + FI(30%) + Cash(10%). For simplicity assume firm has two composites Equity and Fixed income, then old GIPS standards used to allow the the XYZ account to be split and reported into the two separate composites. BUt in doing that you'd have to "carve-out"/allocate the $100,000 Cash between the fictitious separate accounts XYZ-Equity and XYZ-Fixed income.

Starting this year carve-out are not allowed, i.e. unless you had two separate Sub-accounts Cash-Equity and Cash-FI, presumably the Equity and FI are two separate managers deciding how much cash to maintain.