Franklin Templeton is closer to launching two exchange-traded funds that will invest in U.S. stocks and reinvest dividends into bitcoin exposure. Recent regulatory filings disclose their fees, portfolio allocations, and trading plans.
- Franklin Templeton has registered two "Dividend-to-Bitcoin" ETFs on Nasdaq.
- The management fee for stock ETFs is 0.09%, and for innovative funds, it is 0.19%.
- Both strategies start with a 5% Bitcoin exposure and will reinvest stock dividends.
- The Bitcoin allocation will be rebalanced quarterly with a separate 20% cap.
According to registration documents filed with the U.S. Securities and Exchange Commission (SEC) on October 22, the Franklin US Equity Bitcoin DRIP Index ETF and the Franklin US Innovation Bitcoin DRIP Index ETF have registered their shares for trading on Nasdaq.
These two funds will combine traditional stock investments with a mechanism that directs dividend income toward bitcoin-linked investments. Their proposed ticker symbols are FBEQ and FIBT, but Franklin Templeton has not yet confirmed when trading will begin.
Franklin Templeton combines U.S. equities with Bitcoin exposure
ETF analyst Nate Geraci drew attention to these products on October 26, noting that they will hold U.S. stocks while directing dividends toward Bitcoin.
Geraci wrote: “It’s essentially like investing in the S&P 500 and Nasdaq 100, with dividends flowing to BTC.” He described this proposed structure as a way to make cryptocurrency exposure more accessible to traditional stock investors.
He said these funds have a target Bitcoin allocation of 5% and described Franklin Templeton's approach as "smart product design."
These two ETFs track different indices maintained by VettaFi. The U.S. equity product tracks a large-cap index based on a pool of 500 major U.S. companies; the innovation strategy focuses on 100 companies selected from an innovation-oriented stock pool.
Both indices began with a 95% allocation to equities and a 5% allocation to bitcoin-related investments.
Franklin Templeton initially submitted this dividend strategy in June, followed by multiple revisions to the registration documents.
This October document concerns the registration of securities under the Securities Exchange Act and does not mean that investors can already purchase these ETFs.
How does the dividend-to-Bitcoin strategy work?
This investment strategy systematically reinvests dividend payments from the underlying stock portfolio into bitcoin exposure.
According to the fund prospectus dated October 22, ordinary dividends and special dividends will be reflected in the index's Bitcoin allocation on the next trading day following the relevant ex-dividend date.
The fund will track these indices through instruments including Bitcoin exchange-traded products, futures, options, and qualified depositary receipts.
Therefore, investors will hold ETF shares that provide exposure to stocks and bitcoin-related assets, rather than bitcoin stored directly in personal wallets.
As dividends accumulate or market prices fluctuate, asset allocation may change, with specific limits controlling the proportion of Bitcoin that can be allocated in each portfolio.
During quarterly rebalancing, if the Bitcoin allocation exceeds 5%, it will be reduced to 4.5%. If Bitcoin exposure remains at 5% or below, the index will maintain this weight unchanged.
A separate 20% cap applies between plan reviews. If this threshold is breached, the allocation will be reduced to 4.5% at the close of the second trading day following the breach.
Franklin Templeton discloses different management fees
The updated prospectus shows that the annual management fee for the Franklin US Equity Bitcoin DRIP Index ETF is 0.09%, and the annual management fee for the Franklin US Innovation Bitcoin DRIP Index ETF is 0.19%.
Based on a $10,000 investment, the associated fees are approximately $9 and $19 per year, respectively, before considering market fluctuations, brokerage fees, or any other costs beyond the listed operating expenses.
The document shows that VettaFi is the index provider and permits the holding of certain bitcoin-related instruments through a wholly owned subsidiary in the Cayman Islands.
The prospectus warns that cryptocurrency volatility, derivative exposure, trading costs, and regulatory changes may all impact performance.
Franklin Templeton has provided direct cryptocurrency exposure through products such as the Franklin Bitcoin ETF and the Franklin Crypto Index ETF, which combines exposure to both Bitcoin and Ethereum.
The proposed dividend strategy will add a stock component to its existing product lineup.
What’s next for the Franklin Templeton ETF?
The post-effective amendment filed on October 22 includes the investment terms of these funds, and the separate Form 8-A lists Nasdaq as the exchange for which the shares are registered.
Franklin Templeton's registration process has been ongoing since June, with amended filings submitted in August, September, and October.
The latest prospectus lists these funds as newly issued products and does not provide historical portfolio turnover data.
The exact first trading date has not been confirmed, and the registration documents do not specify how much investors will contribute to either fund at the start of trading.
The prospectus also stipulates that creation units typically consist of 100,000 shares of the U.S. equity fund and 50,000 shares of the innovative fund, and authorized participants are responsible for the creation and redemption of large ETF blocks.