EL7.AI
CryptoMedium•23 October 2026•
4 min read

Franklin Templeton’s Two New Indexes Start With 5% Bitcoin Allocation

Key Facts

1The two indexes start with a 5% allocation to bitcoin and 95% to constituent stocks at inception.
2The latest registration statement set Oct. 20, 2026, as the effective date, following an amendment filed on Oct. 9, 2026.
3The innovation index is based on 100 large companies listed in the United States as of April 30, 2026.
4If bitcoin’s allocation exceeds 20% between rebalancing dates, it is reset to 4.5% at the close of the second following business day.

Franklin Templeton registered two new exchange-traded funds within the Franklin Templeton ETF Trust: the Franklin US Equity Bitcoin DRIP Index ETF and the Franklin US Innovation Bitcoin DRIP Index ETF, according to filings with the U.S. Securities and Exchange Commission. The filings set each fund’s objective as tracking a U.S. equity index with a mechanism for reinvesting distributions in bitcoin, before fees and expenses. The indexes start with a 5% allocation to bitcoin and 95% to their constituent stocks. Those percentages apply to the indexes at inception and do not guarantee that the funds’ actual holdings will match them exactly. The latest registration statement set Oct. 20, 2026, as the effective date. The public filings do not establish Nasdaq’s approval of the funds’ listing or the start of trading.

The U.S. equity fund aims to track the VettaFi US Large-Cap 500 Bitcoin DRIP Index, while the innovation fund tracks the VettaFi US Innovation 100 Bitcoin DRIP Index. The second index is based on a basket of 100 large companies listed in the United States, according to the prospectus, which says it had 100 constituents as of April 30, 2026. The product design therefore combines two approaches to U.S. equities: a broad large-cap index and an index focused on innovation companies. The tracking objectives for both funds are calculated before fees and expenses, as stated in the prospectus. The difference between them begins with the index each fund tracks, while both share a mechanism that allocates part of the index to bitcoin.

The DRIP mechanism in the two indexes converts stock distributions into additional bitcoin exposure. The prospectus says ordinary and special distributions are reinvested in bitcoin at the market open on the trading day following the ex-dividend date. As this mechanism is implemented, bitcoin’s weight in the index may rise over time rather than remain at the initial 5% allocation. That weight is subject to specific rebalancing rules: if it exceeds 5% at a quarterly rebalance, it is reduced to 4.5%. If it exceeds 20% between rebalancing dates, it is reset to 4.5% at the close of the second following business day. These levels set out how an increase in bitcoin’s weight is handled under the index methodology.

The methodology also caps stock weights within the index. No single stock may exceed 20%, and the combined weight of stocks each representing more than 5% may not exceed 40% of the index at rebalancing. At the fund level, the prospectus says that, under normal market conditions, at least 80% of net assets will be invested in index constituents and bitcoin-related investments in line with its allocation. These rules distinguish bitcoin’s weight in the index, the weights of its constituent stocks and the minimum share of fund investments in those constituents and related investments. The prospectus also says the two funds are new and have no performance history; performance information will be available after operations begin. Trading in the funds’ shares may be halted because of market conditions or other reasons, and investors may incur brokerage commissions or fees when buying and selling through a broker.

The stated registration effective date changed through successive amendments. The amendment series initially set Sept. 15, 2026, then Sept. 22 and Sept. 29, followed by Oct. 13, before an amendment filed on Oct. 9 set a new date of Oct. 20, 2026, and applied only to the two funds. Registration effective dates do not in themselves establish Nasdaq’s approval of a listing or that trading has begun. The prospectus also states that the U.S. Securities and Exchange Commission has neither approved nor disapproved these securities, nor passed on the adequacy of the prospectus. In market data reported for the same period, bitcoin closed at $81,652.01 on Oct. 23, 2026. Performance information for the two funds will be available after operations begin, according to the prospectus.