Asset manager with $1.78 trillion AUM seeks SEC approval for equity-to-Bitcoin DRIP funds
Franklin Templeton filed paperwork with the SEC on June 18 for two new ETFs that automatically reinvest US stock dividends into Bitcoin-linked assets through a quarterly rebalancing mechanism, expanding the firm’s institutional crypto product suite beyond its existing Franklin Bitcoin ETF (EZBC).
The first proposed fund, the Franklin US Equity Bitcoin DRIP Index ETF, will track the VettaFi US Large-Cap 500 Bitcoin DRIP Index and hold the 500 largest US companies. The second, the Franklin US Innovation Bitcoin DRIP Index ETF, will track the VettaFi US Innovation 100 Bitcoin DRIP Index, comprising the 100 largest non-financial Nasdaq companies. Both funds will launch with a 95% equity allocation and 5% Bitcoin allocation.
The dividend reinvestment mechanism operates automatically. When a holding pays a dividend, the fund reinvests the proceeds into Bitcoin-related assets at market open the day after the dividend ex-date. Quarterly reviews then rebalance the Bitcoin allocation. If Bitcoin drifts above 5% of the portfolio, it is trimmed back to 4.5%. An emergency cap triggers additional rebalancing to 4.5% if Bitcoin exceeds 20% between scheduled reviews.
Franklin Templeton will obtain Bitcoin exposure through multiple channels: exchange-traded products (ETPs), other investment companies, futures, options, depositary receipts, and a Cayman Islands subsidiary. The subsidiary structure is capped at 25% of assets and is designed to qualify certain Bitcoin-related income as “good income” under US Internal Revenue Code provisions, according to the filing.
The proposed funds impose strict concentration limits. Individual stock holdings are capped at 20% of the portfolio, and combined weight for stocks above 5% cannot exceed 40%. These guardrails prevent excessive equity concentration while the dividend reinvestment mechanism gradually shifts capital toward Bitcoin.
The filing arrives as US spot Bitcoin ETFs attract sustained institutional interest. Since their 2024 launch, these products have accumulated $53.40 billion in net inflows and now hold $78.32 billion in total assets. However, the sector shed $6 billion over the past six weeks, signaling volatility in institutional demand.
Franklin Templeton’s existing Franklin Bitcoin ETF (EZBC) has attracted $330 million in cumulative net inflows and manages $360 million in assets. The two new DRIP-structured funds represent a product innovation within the firm’s Bitcoin ETF lineup, combining traditional equity exposure with systematic Bitcoin allocation.
BlackRock operates a competing product, the iShares Bitcoin Premium Income ETF (BITA), which allocates 25% to 35% of its portfolio to call options on Bitcoin. Franklin’s dividend reinvestment approach differs structurally, using automatic reinvestment and rebalancing rules rather than derivatives-based income strategies.
The SEC has not yet approved the filings. Franklin Templeton did not disclose expected launch dates, expense ratios, or listing exchanges for the proposed funds.
