Bitcoin: Franklin Templeton prepares two ETFs that recycle dividends into BTC

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The two funds are called Franklin US Equity Bitcoin DRIP Index ETF (FBEQ) and Franklin US Innovation Bitcoin DRIP Index ETF (FIBT). DRIP is the American acronym for automatic dividend reinvestment. The formula is a stock market classic, here diverted to another asset.

The mechanism appears in black and white in the prospectus filed on October 22 with the SEC. Each dividend, ordinary or exceptional, is reinvested in bitcoin at the market opening the day after the ex-date. At launch, the index is 95% stocks and 5% bitcoin.

Franklin registered both funds for listing on Nasdaq on the same day. FBEQ tracks the VettaFi US Large-Cap 500 Bitcoin DRIP Index, built on US large caps. FIBT replicates a variant backed by the VettaFi US Innovation 100, i.e. the hundred largest companies listed on the Nasdaq excluding financial stocks.

Nate Geraci, president of The ETF Store, summarized the concept on October 25 on The shortcut speaks to savers, but the clues are indeed VettaFi's in-house creations.

Dividends automatically increase the share of bitcoin. The guardrail falls with each quarterly rebalancing. If BTC exceeds 5% of the index, it is reduced to 4.5% and the excess goes back into stocks.

A second limit comes into play between two rebalancings. Beyond 20% of bitcoin at a close, the index returns to 4.5% two business days later. The price used is the Kaiko Bitcoin New York Reference Rate at 4 p.m. New York time.

Do not look for private keys in these funds. The prospectus authorizes bitcoin ETPs, including those of Franklin affiliates, futures, options and certificates of deposit. A portion may pass through a subsidiary in the Cayman Islands, up to 25% of assets.

The flow remains modest. Large American capitalizations distribute little and the tech giants of the second index even less. On the costs side, FBEQ shows 0.09% per year and FIBT 0.19%. An investment of $1,000 in FBEQ therefore costs 90 cents per year.

This is not Franklin's first attempt. Its EZBC spot bitcoin ETF has been trading since January 11, 2024 with a fee of 0.19%. We already recounted this bet in our return to Franklin Templeton's bitcoin turn. EZBC targets those who want pure BTC. FBEQ and FIBT target the saver who already buys an index fund and accepts a pinch of bitcoin without having to dose it themselves.

The hybrid format already exists. Since 2021, Simplify has managed the SPBC, listed on the NYSE, which aims for 100% exposure to American stocks plus 10% of bitcoin housed in the VanEck HODL ETF. Its fees reach 0.54% for an outstanding amount of $43.6 million as of June 30, 2026.

Machine-translated from French