GIPS - Carve outs balance, multiple, included, single

joehogue

Per GIPS, carve out means a single or multiple asset class segment of a multiplae asset class portfolio. I am still confused though - what does it really mean? Why carve-outs must not be included in a composite unless the carve-out is managed separately with its own cash balance?

Many thanks and good luck tomorrow!~

lcw77

Assume that you have a multi-asset class portfolio that includes equities and bonds etc. Now you want to include the equity in an equity composite as a carve-out - you can only do this is if you also include the part of the original portfolio's cash portion that can be allocated to the equity component (the policy that is used to determine the amount of the cash portfolio needs to be disclosed). If you don't include the cash, then it doesn't qualify as a carve-out

cityboy

Balanced Fund : 60% Equities , 40 % bonds.

If Equities is managed to a mandate or strategy which is similar to a composite's definition , but cash is NOT separately managed ( i.e. you can sell bonds to buy equities or vice versa )

Then you cannot include the Equities strategy of Balanced in the composite post Jan 1 2010.