Franklin Templeton has registered two new exchange-traded funds for Nasdaq that combine broad U.S. equity portfolios with a rules-based Bitcoin allocation funded partly through stock dividends. The Franklin US Equity Bitcoin DRIP Index ETF, ticker FBEQ, and Franklin US Innovation Bitcoin DRIP Index ETF, ticker FIBT, are scheduled to have prospectuses become effective on October 27, although the filings do not establish a confirmed first trading session.
According to Franklin Templeton’s SEC prospectus, both strategies begin with approximately 95% equity exposure and a 5% Bitcoin allocation, then systematically direct regular and special dividends generated by their underlying equity indexes toward additional Bitcoin exposure. The structure embeds crypto into an otherwise conventional equity-index strategy rather than operating as another standalone spot Bitcoin ETF.
Stock Dividends Gradually Increase Bitcoin Exposure
FBEQ tracks the VettaFi US Large-Cap 500 Bitcoin DRIP Index, whose parent index covers the 500 largest U.S. companies by market capitalization. FIBT follows the VettaFi US Innovation 100 Bitcoin DRIP Index, built from 100 large U.S. issuers listed on Nasdaq while excluding companies classified as financials. The two funds therefore apply the same Bitcoin overlay to different equity universes, separating broad large-cap exposure from a more innovation-focused Nasdaq portfolio.
The DRIP mechanism is more dynamic than a fixed 5% allocation. All regular and special dividends in the underlying indexes are reinvested into Bitcoin at the market open following the relevant ex-dividend date, allowing the crypto weight to rise between scheduled rebalances. If Bitcoin exceeds 5% at a quarterly review, the index cuts the allocation to 4.5%; if it remains at or below 5%, no reduction is required.
A separate safeguard prevents Bitcoin from becoming the dominant portfolio component. If Bitcoin exposure rises above 20% between quarterly rebalances, the index reduces it to 4.5% at the close of the second business day after the threshold is breached. That mechanism keeps Bitcoin structurally subordinate to equities even during periods when crypto significantly outperforms stocks.
The funds themselves can replicate that Bitcoin allocation through exchange-traded products, futures, options and depositary receipts representing Bitcoin interests, with certain investments potentially held through a wholly owned Cayman Islands subsidiary. FBEQ and FIBT therefore provide Bitcoin exposure through regulated financial instruments rather than holding coins directly in an investor-controlled wallet. The design differs from physically backed spot Bitcoin fund structures where direct Bitcoin holdings form the core portfolio exposure.
Hybrid ETFs Bring Bitcoin Into Traditional Portfolios
The structure also reflects a broader trend of Bitcoin exposure being embedded inside conventional investment products. BlackRock’s Strategic Income Opportunities fund, for example, previously increased its position in the firm’s own Bitcoin ETF. Franklin’s DRIP strategy formalizes that blending at the index level by making Bitcoin accumulation part of the portfolio methodology rather than a discretionary allocation decision.
ETF analyst Nate Geraci described the approach as a “smart product design”, pointing to the combination of a core stock allocation with gradually accumulated Bitcoin exposure. The products give investors a single listed wrapper containing both traditional equities and a controlled crypto allocation, although their performance will still reflect Bitcoin volatility, derivatives costs, tracking error and the behavior of the underlying stock portfolios.
Launching soon…
ETFs that hold US stocks & reinvest any dividends into bitcoin.
Basically like investing in S&P 500 & Nasdaq 100 w/ dividends going to btc.
Targeting 5% btc allocation.
Think smart product design by Franklin Templeton.
Easy way for everyday investors to gain… pic.twitter.com/3JkVFughjS
— Nate Geraci (@NateGeraci) October 25, 2026
The funds carry different price points. FBEQ lists total annual operating expenses of 0.09%, while FIBT charges 0.19%, with VettaFi serving as index provider and Franklin Advisory Services managing the portfolios. Franklin already participates in the broader regulated crypto-fund market, where investor demand has increasingly moved through ETF wrappers rather than direct custody, even as Bitcoin ETF flows can shift sharply between inflows and redemptions.
The dividend reinvestment feature should not be interpreted to mean shareholders can never receive fund distributions. Franklin says the ETFs intend to distribute net investment income at least annually and may need to reduce dividend reinvestment or sell portfolio assets to meet tax requirements. The distinctive feature is therefore how the indexes allocate underlying stock dividends toward Bitcoin exposure, not the elimination of all shareholder distributions.
As of October 26, the confirmed milestone is the registration of FBEQ and FIBT for Nasdaq and an October 27 prospectus effective date, not confirmed commencement of trading. Once listed, the products will add another regulated route for combining Bitcoin with traditional portfolio exposure, alongside a market already experimenting with increasingly varied institutional crypto ETF structures.
Liam Foster follows crypto markets from France, with a close eye on Bitcoin, Ethereum, Layer 1 assets, derivatives, sentiment and smart money flows. His coverage looks past the daily price move to understand what is happening underneath: liquidity, leverage, positioning and the behavior of larger players.
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