Franklin files ETFs to reinvest dividends into Bitcoin

On June 18, Franklin Templeton filed with regulators for two exchange-traded funds: the Franklin US Equity Bitcoin DRIP Index ETF and the Franklin US Innovation Bitcoin DRIP Index ETF. Both funds are designed to reinvest corporate dividend payments into Bitcoin-related securities and to track VettaFi’s U.S. Large-Cap 500 Bitcoin DRIP Index and U.S. Innovation 100 Bitcoin DRIP Index.

The filings describe a passive multi-asset approach that keeps the majority of each fund in U.S. equities while directing dividend income into bitcoin exposure rather than redeploying cash back into stocks. The documents do not yet disclose final expense ratios, ticker symbols or complete fund names.

Each fund is planned to launch with a 95% allocation to U.S. equities and a 5% allocation to bitcoin-related holdings. The underlying indexes include caps and rebalancing rules that limit bitcoin exposure to 20% of the portfolio; if exposure exceeds that cap the index will rebalance bitcoin allocation down to 4.5%. Indexes will rebalance quarterly: if bitcoin exposure is above 5% at a scheduled rebalance it will be reset to 4.5%, while exposure below 5% will remain unchanged under the benchmark rules.

Dividend payments from the indexed equities will be converted into bitcoin-related securities at market open on the business day after the dividend ex-date. Bitcoin exposure in the indexes is planned to come from a mix of bitcoin ETFs, including Franklin’s own EZBC, and from futures and options contracts.

The filings state the funds will primarily hold the equities in their respective VettaFi indexes and use dividend proceeds to accumulate bitcoin exposure through ETFs and derivatives. The applications remain at the filing stage, and final details such as expense ratios, fund names and ticker symbols will be provided later.