Dividend capture by buying SPY and shorting IVV?


Updated: Mar 14th, 2013 | Vance Harwood

If your devious dividend capture plan involves you hedging against SPY’s price movements by selling IVV short until after SPY goes ex-dividend you can forget about it. The IVV (Barclays Global) price doesn’t drop by SPY’s dividend amount on SPY’s ex-dividend date. It continues to track the S&P 500 until it goes ex-dividend a few days later. Your master plan will net out with you down by at least your commission costs.

For  IVV and SPY ex-dividend and distribution dates and lots of others  see here.

If you are interested of an overview of dividend strategies—some of which actually work, see this post.

Thanks to Jeff in the comments below for pointing out to me that IVV management doesn’t have to do anything in order for this to play out this way.

IVV vs SPY (June 2010 ex-dividends), click to enlarge

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Thursday, March 14th, 2013 | Vance Harwood
  • Interesting that SPY takes so much longer to pay out the dividend than IVV. All else being equal, it’s a reason to choose IVV over SPY.

    By the way I’m quite certain the IVV folks are not doing anything to manipulate their price based on SPY’s dividend. Your graph shows that the SPY price is dropping by the “right” amount on ex-dividend day (e.g. roughly by the amount of the dividend in comparison to what it would do absent the dividend), and then IVV follows with its own drop a few days later. Just what one would expect.

  • vance3h

    Hi Jeff, Thanks for pointing out the error in my logic regarding IVV’s price. If I had looked a little closer at my own graph it would have been obvious! If anything it is SPY’s price that is being manipulated–after all the S&P500 index doesn’t care when SPY goes ex-dividend.

    — Vance

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