Franklin Templeton turns stock dividends into bitcoin in two new ETFs

Franklin Templeton added two ETFs that keep 95% of assets in U.S. equities and 5% in bitcoin, then sweep every stock dividend into the cryptocurrency at the next market open.

The Franklin US Equity Bitcoin DRIP Index ETF (FBEQ) and the Franklin US Innovation Bitcoin DRIP Index ETF (FIBT) extend Franklin Templeton's $70 billion U.S. ETF lineup. Expense ratios were not disclosed. Todd Mathias, head of U.S. ETF product strategy and development at Franklin Templeton, discussed the funds on the ETF Prime podcast, ETF Trends reported.

For advisors, the funds move two decisions—how much bitcoin a client holds and when to buy it—out of the client meeting and into index rules. Regular and special dividends are swept into bitcoin after the ex-dividend date, so crypto exposure arrives through a single equity line item rather than a separate allocation. The bitcoin sleeve can use exchange-traded products, futures or options, so a due-diligence question is which route each index uses.

Mathias said the arrangement works as a dollar-cost averaging mechanism into a volatile asset class. Roughly 400 of the S&P 500's 500 companies pay a quarterly dividend, he said.

FBEQ tracks the VettaFi US Large-Cap 500 Bitcoin DRIP Index. FIBT tracks the VettaFi US Innovation 100 Bitcoin DRIP Index, built from the top 100 non-financial Nasdaq leaders.

At quarterly reviews, any bitcoin weight above 5% is trimmed to 4.5% and the proceeds are reallocated across the underlying equities. An intra-quarter fail-safe applies as well. The cap limits how much bitcoin can grow after a rally, which also limits how much of a later decline lands on the fund.