Q & A Database

The GIPS Standards Q&A database contains questions and answers (Q&As) on various searchable topics that provide additional interpretation on an issue. Q&As are considered to be authoritative guidance and must be followed in order to claim compliance with the GIPS standards.

Content from prior Q&As was included in the GIPS Standards Handbook as much as possible and many Q&As were archived. Change the Status drop-down filter to "Archived" to see the archived Q&As.

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Archived

Effective: 1 November, 2012 - 31 December, 2019

Categories: Carve-Outs

Source: GIPS Handbook, 3rd Edition

We manage five balanced portfolios. For periods prior to 1 January 2010, we carved out the equity segments of these balanced portfolios, allocated cash to the equity segment based on relative beginning of period assets, and included the equity segments with allocated cash in the Equity Composite. We understand that effective 1 January 2010, carve-outs must not be included in composites unless they are actually managed separately with their own cash.

Of the five carve-outs, only three meet the 1 January 2010 requirement to be managed separately with their own cash balance. Can we include only these three carve-outs in the Equity Composite after 1 January 2010?

Yes. Beginning 1 January 2010, those carve-outs not managed separately with their own cash balance are not eligible for inclusion in composites as they do not meet the definition of a carve-out as of that date. If a firm creates a carve-out of a particular strategy, then all similar portfolio segments within the firm managed to that strategy and managed separately with their own cash balance must be included in the composite.

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