Franklin Templeton has launched two Nasdaq-listed exchange-traded funds that direct dividends from U.S. stocks into bitcoin. The Franklin U.S. Equity Bitcoin DRIP Index ETF (FBEQ) and Franklin U.S. Innovation Bitcoin DRIP Index ETF (FIBT) are designed to combine equity investments with a bitcoin allocation that can grow through dividend reinvestment.
FBEQ tracks the VettaFi U.S. Large-Cap 500 Bitcoin DRIP Index, which holds large U.S. companies weighted by float-adjusted market capitalization. At the index’s inception, 95% is allocated to stocks and 5% to bitcoin. Dividends, including regular and special payments, are directed into bitcoin at the market open on the day after the stock’s ex-dividend date.
The index applies limits to its bitcoin allocation. At quarterly rebalancing, an allocation above 5% is reduced to 4.5%. If bitcoin rises above 20% of the index between rebalances, the allocation is cut to 4.5% within two business days, with the proceeds moved back into stocks.
Unlike a fund that holds bitcoin directly, the ETFs obtain exposure through bitcoin exchange-traded products, futures and options, or depositary receipts. The source says these investments may in some cases be held through a Cayman Islands subsidiary. FBEQ has a 0.09% expense ratio and no 12b-1 fee.
Franklin Templeton said the funds offer a systematic way to combine U.S. equities and bitcoin. The launch followed registration filings with the Securities and Exchange Commission on October 22; the initial filings for both funds were made in June.
Sources: Bitcoin Magazine.