Franklin Templeton sets October 27 effective date for filings of two funds allocating 5% to bitcoin
Key Facts
Franklin Templeton set October 27, 2026, as the effective date for an amendment to the registration of two exchange-traded funds linking U.S. equity indexes to bitcoin exposure, according to a filing submitted to the U.S. Securities and Exchange Commission on October 22. The funds are the Franklin US Equity Bitcoin DRIP Index ETF, ticker FBEQ, and the Franklin US Innovation Bitcoin DRIP Index ETF, ticker FIBT, both registered for listing on Nasdaq. The date means the amendment becomes effective, but it does not establish that trading in the funds began on October 26. The move is part of a strategy that redirects cash equity distributions into bitcoin-related investments. The filing expressly states that the SEC has neither approved the securities nor endorsed the adequacy of the prospectus.
Each fund’s underlying index starts with a 5% allocation to bitcoin and 95% to its constituent securities. The model does not rely on the funds buying bitcoin directly; the filing allows exposure through exchange-traded products, including bitcoin-backed products, options and futures contracts, and depositary receipts. Some investments may also be made through a wholly owned subsidiary in the Cayman Islands. Ordinary and special distributions are reinvested in bitcoin at the market open on the day after the ex-distribution date. Bitcoin’s share therefore grows through the distribution-reinvestment mechanism, with investment carried out through the instruments specified in the filing.
The strategy sets limits on bitcoin’s share of the index. If the allocation exceeds 5% at a quarterly rebalance, it is reduced to 4.5%; if it is at or below 5%, it remains unchanged at that review. The index also sets an overall cap of 20% on bitcoin exposure between rebalances. Under normal market conditions, the funds invest at least 80% of net assets in index constituents and bitcoin-related investments, in line with the index allocation. Each fund seeks to match its index’s performance before fees and expenses, using full replication or representative sampling when holding all constituents at their exact weights is impractical.
FBEQ provides broad exposure to U.S. large-cap stocks through the VettaFi US Large-Cap 500 Bitcoin DRIP Index. The index had 499 securities on September 30, 2026, with constituent market capitalizations ranging from $10.2 billion to $5.5 trillion. It rebalances its constituents every three months and reconstitutes them twice a year. The maximum weight for any single stock is 20%, while the combined weight of stocks each representing more than 5% cannot exceed 40%. Under normal market conditions, the investment policy covers index constituents and bitcoin-related investments at the weights set by the index.
FIBT tracks the VettaFi US Innovation 100 Bitcoin DRIP Index, which is linked to the 100 largest U.S. issuers listed on Nasdaq, excluding financial companies. The innovation fund’s index was concentrated in information technology on September 30, 2026. The filing describes FBEQ as a non-diversified fund and says the fund may concentrate its investments in a sector or group of sectors to a degree similar to its index’s concentration. Under the filing’s definition, concentration occurs when investment in an industry or group of industries reaches 25% or more of net assets. The difference between the indexes means the funds pair the same bitcoin mechanism with two different equity universes and varying concentration risks.
Gross annual operating expenses are 0.09% for FBEQ and 0.19% for FIBT. The filing warns of potential duplication of advisory fees and certain expenses when investing in underlying exchange-traded products, including spot bitcoin products, and notes that those products are not registered under the Investment Company Act of 1940. It also describes bitcoin as a relatively new asset with a limited history compared with stocks, bonds and currencies, saying it has historically been subject to high speculation and significant price volatility. The new fund has no performance record because it has not yet begun investment operations. The filing also warns that its growth or ability to maintain a viable economic scale is not guaranteed, which could lead to liquidation.
In trading on October 26, BTCUSD closed at $80,533.02, compared with a close of $81,189.43 on October 23. EL7.AI reported on October 23 that Franklin Templeton had registered two Nasdaq funds with an initial 5% allocation to bitcoin. The current filing set October 27 as the effective date of the registration amendment, while the date alone does not confirm the first day of trading. The fees published in the filing were 0.09% annually for FBEQ and 0.19% annually for FIBT. The index details, investment limits and mechanism for redirecting distributions into bitcoin remain the main features distinguishing the funds.