Key Takeaways
Franklin Templeton’s two ETFs will reinvest stock dividends into bitcoin-related assets rather than paying them out to investors.
FBEQ targets large-cap US stocks with a 0.09% annual fee, while innovation-focused FIBT charges 0.19%.
Both funds will start with 5% bitcoin exposure and use rebalancing rules to manage their growth, including a 20% trigger for sharp increases.
How Franklin Templeton’s Bitcoin DRIP ETFs Will Work
Franklin Templeton is moving closer to launching two new exchange-traded funds (ETFs) that use dividends from US stocks to increase their bitcoin exposure.
The $1.8 trillion asset manager registered the two funds for Nasdaq trading in a filing with the US Securities and Exchange Commission (SEC) on October 22, 2026.
Franklin Templeton filed the required paperwork with the SEC in June, and is now getting ready to launch the funds on Nasdaq.
The funds are the Franklin US Equity Bitcoin DRIP Index ETF (FBEQ) and the Franklin US Innovation Bitcoin DRIP Index ETF (FIBT). Their prospectus lists October 27 as a proposed effective date, although the filing does not confirm when trading will begin.
Both funds will start with 95% of their investments in US stocks and 5% in bitcoin-related assets. Their main difference is the types of companies they invest in.
The new funds use a strategy known as a dividend reinvestment plan, or DRIP.
Normally, when a company pays a dividend, investors can use that money to buy more shares. Franklin Templeton's new ETFs will take a different approach by using those payments to increase their bitcoin exposure.
Both regular and special dividends from the funds' stock holdings will be directed toward bitcoin-related investments on the next business day after the relevant ex-dividend date.
This means the funds can gradually build their bitcoin holdings over time without investors having to buy bitcoin themselves.
Investors will own shares in the ETFs, not bitcoin directly. They will not need a personal Bitcoin wallet or have to manage private keys.
The funds will also not hold bitcoin directly on the blockchain. Instead, they may gain exposure through bitcoin exchange-traded products, including Franklin Templeton's existing spot Bitcoin ETF, EZBC, as well as futures, options and other eligible investments.
The two ETFs will follow different indexes developed by VettaFi.
FBEQ will track the VettaFi US Large-Cap 500 Bitcoin DRIP Index, which selects stocks from a group of 500 major US companies. The index covers a broad range of industries, including technology.
VettaFi US Large-Cap 500 Bitcoin DRIP Index composition
FIBT will follow the VettaFi US Innovation 100 Bitcoin DRIP Index, which focuses on 100 large companies from an innovation-oriented Nasdaq stock universe, excluding financial companies.
VettaFi US Innovation 100 Bitcoin DRIP Index composition
Although the funds invest in different groups of stocks, both will use dividends to build bitcoin exposure. Their proposed annual fees will differ. FBEQ will charge 0.09%, while FIBT will charge 0.19%.
Franklin Templeton has set rules to stop bitcoin from becoming too large a part of either fund.
Both ETFs will begin with a 5% bitcoin allocation. At each quarterly review, if that allocation has grown above 5%, the index will reduce it to 4.5% and shift the remaining value back into stocks.
There is also a separate rule for sharp increases in bitcoin's value. If bitcoin exposure rises above 20% between quarterly reviews, the index will reduce it to 4.5% at the close of the second business day after the limit is breached.
This means bitcoin's share of a fund can rise above 5%, but the index will periodically reduce that exposure. The 20% threshold is not an absolute limit, and can be exceeded temporarily.
Bitcoin's price can change quickly. These funds will face risks from both the stock market and Bitcoin, along with potential transaction costs, custody issues and regulatory changes.
The new ETFs build on Franklin Templeton's existing digital asset investments.
The company already offers the Franklin Bitcoin ETF (EZBC), which provides direct exposure to bitcoin. Figures cited in the reports put the fund's cumulative net inflows at approximately $335 million.
