Franklin Templeton has completed the final regulatory step before launching two ETFs that direct stock dividends into bitcoin exposure. The asset manager oversees $1.7 trillion. Franklin Templeton submitted Form 8-A to the Securities and Exchange Commission on October 22 to register the funds' shares for Nasdaq trading. The funds are the Franklin US Equity Bitcoin DRIP Index ETF and the Franklin US Innovation Bitcoin DRIP Index ETF. A prospectus submitted that day gives October 27 as the effective date. The initial fund filings appeared in June without trading symbols or fee information.
The Equity fund trades under the ticker FBEQ and follows the VettaFi US Large-Cap 500 Bitcoin DRIP Index. The index selects the largest 500 U.S. companies by market capitalization and weights holdings using float-adjusted market capitalization. As of September 30, the index contained 499 stocks with market capitalizations ranging from $10.2 billion to $5.5 trillion. Information technology accounted for a concentration of the holdings.
Both funds start with a 95% allocation to U.S. stocks and a 5% allocation to bitcoin. The Equity index directs every regular or special dividend into bitcoin when trading opens the day after the ex-dividend date. Each dividend payment increases the portfolio's bitcoin share. Conventional dividend reinvestment plans use dividends to purchase additional shares in the company making the payment. Franklin Templeton's approach instead uses the dividend cash for bitcoin exposure. Investors can accumulate that exposure without opening a cryptocurrency exchange account, maintaining a wallet or choosing custody arrangements.
The index reduces any bitcoin allocation above 5% to 4.5% at each quarterly rebalance. Between rebalances, the index cuts bitcoin exposure to 4.5% within two business days if the allocation exceeds 20%. Proceeds from that reduction go back into stocks. These limits keep the portfolio primarily invested in equities rather than bitcoin.
FBEQ does not own bitcoin directly on-chain. FBEQ obtains bitcoin exposure through exchange-traded products, including Franklin Templeton's spot bitcoin fund, futures, options or depositary receipts. Some exposure may be obtained through a Cayman Islands subsidiary. FBEQ charges an expense ratio of 0.09% and has no 12b-1 fee. Franklin Advisory Services manages FBEQ, and Franklin Templeton Institutional acts as sub-advisor. Dina Ting, Hailey Harris, Joe Diederich and Basit Amin are the portfolio managers.
The Innovation fund applies the same dividend reinvestment approach to the VettaFi US Innovation 100 Bitcoin DRIP Index. That index selects from the largest 100 non-financial companies listed on Nasdaq.
Franklin Templeton applied for a spot bitcoin ETF in September 2023 and introduced the fund as EZBC in January 2024. Franklin Templeton acquired 250 Digital in April and established Franklin Crypto as a division serving institutional digital asset clients. CEO Jenny Johnson has argued that blockchains pose a greater threat to Wall Street's fee arrangements than to Wall Street's technology. The dividend ETFs broaden the strategy to investors who might not otherwise purchase bitcoin. FBEQ can allow a retiree investing through a brokerage account to accumulate bitcoin exposure from stock dividends over several years.
The prospectus cautions that investors may lose money. The prospectus also warns that fluctuations in bitcoin prices may influence the funds' net asset value.
Franklin Templeton Completes Final Steps for Dividend-to-Bitcoin ETFs
FLASH AIShare
Summary
Franklin Templeton has finalized regulatory approval for two Bitcoin ETF news-linked funds that convert stock dividends into bitcoin exposure. The Franklin US Equity Bitcoin DRIP Index ETF (FBEQ) and Franklin US Innovation Bitcoin DRIP Index ETF will start trading on October 27. Both funds initially allocate 95% to U.S. stocks and 5% to bitcoin, with dividends reinvested into Bitcoin news-driven exposure. Bitcoin allocations are capped at 5%, with excess rebalanced into stocks. FBEQ gains exposure via ETPs, not direct ownership. The funds charge 0.09% and are managed by Franklin Advisory Services.
Source:Show original
Disclaimer: The information on this page may have been obtained from third parties and does not necessarily reflect the views or opinions of KuCoin. This content is provided for general informational purposes only, without any representation or warranty of any kind, nor shall it be construed as financial or investment advice. KuCoin shall not be liable for any errors or omissions, or for any outcomes resulting from the use of this information.
Investments in digital assets can be risky. Please carefully evaluate the risks of a product and your risk tolerance based on your own financial circumstances. For more information, please refer to our Terms of Use and Risk Disclosure.