---
title: "Dual-ETF S&P 500 Allocation: Why Kedalion Holds IVV + SPYM"
type: learn
slug: dual-etf-sp500-allocation-ivv-spym-tax-loss-harvesting
canonical_url: https://13finsight.com/learn/dual-etf-sp500-allocation-ivv-spym-tax-loss-harvesting
published_at: 2026-05-15T08:57:56.552Z
updated_at: 2026-05-15T08:57:59.423Z
author: Sarah Mitchell
author_title: Education Editor
author_url: https://13finsight.com/authors/sarah-mitchell
word_count: 685
locale: en
source: 13F Insight
---

# Dual-ETF S&P 500 Allocation: Why Kedalion Holds IVV + SPYM

> Kedalion Capital holds 56% IVV and 39% SPYM — two separate S&P 500 ETFs at near-identical expense ratios. The dual allocation enables tax-loss harvesting between positions, account-level diversification, and reduced market-impact during rebalancing. Here's the structural logic.

Kedalion Capital Management LLP holds 56.89% of its $3.48 billion 13F in iShares Core S&P 500 ETF (IVV) plus 39.32% in SPDR Portfolio S&P 500 ETF (SPYM). Combined 96.21% in two S&P 500 ETFs at nearly identical expense ratios (IVV at 0.03%, SPYM at 0.02%). Why split a pure-beta S&P 500 allocation across two ETFs instead of using a single fund? The answer is sophisticated tax-management mechanics — specifically tax-loss harvesting without violating IRS wash-sale rules. Multiple pure-beta wealth managers and sophisticated RIAs deploy dual-ETF S&P 500 allocations for this exact purpose. The strategy is invisible in single-fund holders but obvious once you understand the tax mechanics.The IRS wash-sale rule problemSection 1091 of the IRS code disallows tax-loss harvesting if a 'substantially identical' security is purchased within 30 days before or after the loss-realization sale. The rule prevents investors from claiming tax losses on positions they continue to hold.For pure-beta wealth managers, this creates a problem:S&P 500 tracking is essential to client mandates.Market drawdowns produce tax-loss harvesting opportunities.Selling a single S&P 500 ETF and immediately repurchasing the same ETF triggers wash-sale disallowance.Going to cash for 31 days violates the client mandate by leaving the S&P 500 exposure.The dual-ETF solution: hold two separate S&P 500 ETFs that the IRS considers not substantially identical, even though they track the same index. Sell the underwater ETF for the tax loss; buy the alternative ETF immediately to preserve the market exposure.How dual-ETF tax-loss harvesting worksThe mechanics:Hold both IVV and SPYM at the start of the year.If IVV trades down meaningfully through a market drawdown, sell IVV at a loss.Simultaneously purchase additional SPYM to maintain S&P 500 exposure.Wait 31 days for the wash-sale window to pass.Optionally rebalance back to original IVV + SPYM weights.The tax loss is realized and claimable; the S&P 500 exposure is preserved throughout. The strategy can be repeated each market cycle, accumulating tax-loss carryforwards that offset capital gains in future years.Why IVV and SPYM are not 'substantially identical'The IRS has not provided definitive guidance on dual-ETF wash-sale treatment, but tax practitioners generally consider two S&P 500 ETFs from different providers (BlackRock's IVV and State Street's SPYM) to be not substantially identical because:Different fund sponsors and management. IVV is managed by BlackRock; SPYM is managed by State Street.Different fund structures. While both track the S&P 500, the funds have separate prospectuses, custodial relationships, and operational structures.Different expense ratios. IVV at 0.03% and SPYM at 0.02% have nominally different cost structures.Different tracking methodologies. Even though both track the S&P 500, the operational tracking can differ marginally.The conservative view treats them as not substantially identical for wash-sale purposes. The aggressive view treats them as substantially identical. Most pure-beta managers operate on the conservative view as best practice.Who uses dual-ETF strategiesThree categories of US institutional managers deploy dual-ETF S&P 500 allocations:Pure-beta wealth managers like Kedalion Capital Management LLP (96% in IVV + SPYM).RIA wealth-management firms serving high-net-worth taxable clients where after-tax returns matter materially.OCIO providers like Cambridge Associates (multiple S&P 500 ETF allocations across IVV plus broader Vanguard ETFs).What this means for 13F readersThree observations:Dual-ETF S&P 500 allocation signals tax-aware wealth management. When a 13F holds both IVV and another S&P 500 ETF (SPYM, VOO, SPY) at meaningful weights, the manager is likely a tax-aware RIA or wealth-management firm serving taxable clients.The split ratio reflects operational tax-lot management. Kedalion's 56% IVV + 39% SPYM split likely reflects client account-level tax-lot positioning rather than tactical allocation views.This is a wealth-management feature, not an institutional-investment view. Pure passive index funds and pension funds don't typically use dual-ETF strategies because their tax treatment differs from taxable individual accounts.What to trackPure-beta wealth manager 13Fs. Watch IVV + SPYM combined weights across multiple quarters at Kedalion and similar firms.Major market drawdowns. Dual-ETF strategies become especially active during 10%+ S&P 500 drawdowns when tax-loss harvesting opportunities are largest.IRS guidance on ETF wash-sale treatment. Any IRS clarification of the substantially-identical standard could materially affect the strategy.For real-time tracking of dual-ETF and pure-beta wealth manager 13F activity, see the institutional signals feed. For related reading techniques on pure-beta and OCIO 13F structures, see our pure-beta wealth manager decoder.

## FAQ

### Why hold both IVV and SPYM?

Tax-loss harvesting. Section 1091 of the IRS code disallows tax-loss claims if a 'substantially identical' security is purchased within 30 days of the loss-realization sale. Pure-beta wealth managers can harvest losses on one S&P 500 ETF (e.g., IVV) and simultaneously purchase a different S&P 500 ETF (e.g., SPYM) to preserve market exposure without violating wash-sale rules. The dual-ETF structure enables sustained tax-loss harvesting across market cycles.

### Are IVV and SPYM substantially identical?

The IRS has not provided definitive guidance, but tax practitioners generally consider IVV (BlackRock) and SPYM (State Street) to be not substantially identical because they have different fund sponsors, separate prospectuses, custodial relationships, and operational structures, plus nominally different expense ratios (IVV at 0.03%, SPYM at 0.02%). Most pure-beta managers operate on the conservative view that the two ETFs are not substantially identical for wash-sale purposes.

### Who uses dual-ETF strategies?

Three categories: (1) Pure-beta wealth managers like Kedalion Capital Management LLP (96% in IVV + SPYM); (2) RIA wealth-management firms serving high-net-worth taxable clients where after-tax returns matter materially; (3) OCIO providers like Cambridge Associates (multiple S&P 500 ETF allocations across IVV plus broader Vanguard ETFs). Pension funds and tax-exempt institutional investors typically don't use this strategy because their tax treatment differs.

### How does dual-ETF tax-loss harvesting work?

Mechanics: (1) Hold both IVV and SPYM at the start of the year; (2) if IVV trades down meaningfully through market drawdown, sell IVV at a loss; (3) simultaneously purchase additional SPYM to maintain S&P 500 exposure; (4) wait 31 days for wash-sale window to pass; (5) optionally rebalance back to original weights. The tax loss is realized and claimable; the S&P 500 exposure is preserved throughout.

### What does dual-ETF S&P 500 allocation signal in a 13F?

Dual-ETF S&P 500 allocation signals tax-aware wealth management. When a 13F holds both IVV and another S&P 500 ETF (SPYM, VOO, SPY) at meaningful weights, the manager is likely a tax-aware RIA or wealth-management firm serving taxable clients. The split ratio reflects operational tax-lot management rather than tactical allocation views. This is a wealth-management feature, not an institutional-investment view.

### Can I use dual-ETF strategies in my own taxable account?

Yes, but consult a tax professional. Individual taxable investors can deploy dual-ETF S&P 500 strategies for tax-loss harvesting purposes, but the practical execution requires careful tax-lot tracking, attention to the 30-day wash-sale window across all accounts (including IRAs), and consideration of state-level tax treatment. The strategy is most valuable for high-net-worth individuals with substantial capital gains to offset.

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Source: 13F Insight — https://13finsight.com/learn/dual-etf-sp500-allocation-ivv-spym-tax-loss-harvesting
Author: Sarah Mitchell — https://13finsight.com/authors/sarah-mitchell
Last updated: 2026-05-15T08:57:59.423Z