Franklin Templeton Registers Two Nasdaq Funds With Initial 5% Bitcoin Allocation
Key Facts
Franklin Templeton registered shares of two new funds with Nasdaq, and the U.S. Securities and Exchange Commission set October 27, 2026, as the effective date of their amended registration filed on October 22, according to the company’s filings with the agency. The funds seek to combine U.S. equities with Bitcoin exposure, with an initial allocation of 5% to the cryptocurrency and 95% to the index constituents. The Form 8-A filing lists Nasdaq as an exchange for the funds, while the registration filing specifies the amendment’s effective date. An effective date does not mean trading begins that day; the filings cited here do not specify a trading start date. The funds are named Franklin U.S. Equity and Bitcoin, and Franklin U.S. Innovation and Bitcoin.
The funds’ mechanism directs stock distributions into Bitcoin instead of reinvesting them in securities. Franklin Templeton’s prospectus says ordinary and special distributions are reinvested in Bitcoin at the market open on the day after the ex-distribution date. Under this approach, the cryptocurrency’s share of the index could rise over time above the initial 5% allocation. The prospectus links this accumulation to stock distributions, while the index rules set points for reducing exposure if it exceeds certain thresholds. The design separates the equity strategies of the two funds, while applying the same distribution-reinvestment mechanism to both.
The Franklin U.S. Equity and Bitcoin fund tracks an index based on a parent index of the 500 largest U.S. companies by market capitalization, according to the prospectus. The Innovation fund is linked to a parent index of the 100 largest U.S. issuers listed on Nasdaq by market capitalization, excluding companies classified in the financials sector. The Innovation index is rebalanced every three months and reconstituted twice a year. These schedules mean that reviewing constituent weights and changing index constituents do not happen at the same frequency. The differing equity indexes give the funds exposure to two different segments of U.S. companies, while the initial Bitcoin allocation remains at 5% in each.
The index rules set a cap to manage an increase in Bitcoin’s share. If the allocation exceeds 5% at a quarterly rebalance, the index reduces it to 4.5%, according to Franklin Templeton’s prospectus. Between rebalancing dates, if exposure exceeds 20% at any close, it is reduced again to 4.5% at the close of the second following business day. The second rule allows intervention before the quarterly review if the allocation exceeds that threshold. The index thus combines a periodic reduction when the 5% threshold is exceeded with an interim measure if exposure reaches 20%. Any potential increase remains linked to the reinvestment of distributions and Bitcoin’s performance, while the reduction rules aim to return the allocation to 4.5% in the specified cases.
The prospectus warns of Bitcoin’s volatility and its potential impact on the fund’s net asset value. It also points to risks associated with instruments linked to the cryptocurrency and its derivatives, and discusses risks related to Bitcoin-backed depositary receipts. The details available here do not provide a basis for listing depositary receipts among the means of exposure the funds will use; the risks in the prospectus therefore remain general context for the nature of the investment. The absence of a historical performance record for the two funds, which are new and have not begun operations, also limits assessment of their past performance. The prospectus states explicitly: "Because the fund is new, it has no performance history."
The registration comes amid a sharp reversal in flows into U.S. spot Bitcoin funds over two consecutive days. The funds recorded net inflows of $524.8 million on October 21, 2026, followed by net outflows of $635.6 million on October 22, according to EconoTimes, citing Farside Investors. The report estimated that the October 22 withdrawals pushed October’s cumulative balance to a deficit of about $175.6 million through that date. In market trading, EL7 data showed Bitcoin closing at $81,189.43 on October 23. These figures place the design of the two new funds in a market where flows during the period cited swung sharply from one day to the next.