Franklin Templeton Files for ETFs That Convert Dividends Into Bitcoin

Asset manager Franklin Templeton has completed the regulatory process to launch two exchange-traded funds on the Nasdaq. The Franklin US Equity Bitcoin DRIP Index ETF and the Franklin US Innovation Bitcoin DRIP Index ETF were filed with the United States Securities and Exchange Commission.

The funds operate with a structure that allocates 95% of capital to US stocks and 5% to Bitcoin. The key feature is the automatic conversion of dividends received from portfolio companies into Bitcoin purchases. This process takes place the day after the ex-dividend date for each company.

The FBEQ fund tracks the VettaFi US Large-Cap 500 Bitcoin DRIP index. This index includes the 500 largest US companies by market capitalization with a heavy concentration in the technology sector. Bitcoin exposure is adjusted quarterly to maintain portfolio balance.

If the Bitcoin portion exceeds 20% of the index between rebalancing periods, the excess is sold and the capital returns to stocks. The exposure limit is reset to 4.5% during quarterly adjustments. The strategy seeks to offer a way to passively accumulate digital assets without the need for self-custody.

Bitcoin exposure does not occur through direct ownership on the network. The fund uses exchange-traded products, futures contracts, options, or depositary receipts to compose its digital portion. The management fee for the FBEQ fund is set at 0.09% per year.