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Franklin Templeton filed exchange registrations on October 22 for the Franklin US Equity Bitcoin DRIP Index ETF and the Franklin US Innovation Bitcoin DRIP Index ETF, targeting a listing on Nasdaq.
The Form 8-A filing initiates the exchange-registration process for the two funds. This procedural step does not confirm that either fund has begun trading. The accompanying prospectus filing proposes an effective date of October 27.
Allocation and Rebalancing Rules
The funds are built on VettaFi indexes that begin with a 95% allocation to equities and a 5% allocation to Bitcoin. The ticker for the equity version is FBEQ, and the ticker for the innovation version is FIBT. The annual management fee for FBEQ is 0.09%, while the fee for FIBT is 0.19%.
The core mechanism of the strategy involves reinvesting regular and special equity dividends into Bitcoin. These reinvestments occur at the market open on the day following the ex-dividend date. This process automatically increases the Bitcoin portion of the portfolio as dividends are paid out.
To prevent the Bitcoin allocation from growing too large, the funds employ specific rebalancing rules. At quarterly rebalancing intervals, if the Bitcoin weighting exceeds 5%, it is reduced to 4.5%. A separate corrective rule applies between these reviews. If the Bitcoin weighting rises above 20%, the allocation is reset to 4.5% at the close of the second following business day. This 20% threshold acts as a corrective measure rather than a hard cap, meaning the allocation can temporarily exceed 20% before the reset is triggered.
Structure and Custody
The funds may use Bitcoin-linked investment products and derivatives to replicate the index exposure. Shareholders own shares of the ETFs rather than holding Bitcoin directly in personal wallets. Investors trade these fund shares through the exchange and do not manage private keys or select individual Bitcoin-related instruments.
Franklin Templeton already offers a dedicated Bitcoin ETF with the ticker EZBC. The company describes EZBC as holding Bitcoin and cash, with its value closely dependent on Bitcoin’s market performance. The new DRIP funds differ by keeping the majority of the investment tied to equities, making stock selection and benchmark behavior more significant to overall returns than a modest move in Bitcoin.
The filings outline the planned allocation strategy, fees, and safeguards. The next milestone is for the funds to become effective and open for trading. Until that occurs, the documents describe the intended structure rather than a live track record.
Frequently Asked Questions
What is the proposed effective date for the Franklin Bitcoin DRIP ETFs?
The prospectus filing proposes an effective date of October 27 for the Franklin US Equity Bitcoin DRIP Index ETF and the Franklin US Innovation Bitcoin DRIP Index ETF.
How do the funds handle Bitcoin rebalancing?
At quarterly rebalancing, a Bitcoin weighting above 5% is reduced to 4.5%. If the weighting exceeds 20% between reviews, it is reset to 4.5% at the close of the second following business day.
