Franklin Templeton Launches Two Funds With Initial 5% Bitcoin Allocation
Key Facts
Franklin Templeton announced on October 29 the launch of the FBEQ and FIBT funds, saying they would be listed on Nasdaq under a strategy combining U.S. equities and Bitcoin. Each fund starts with a 95% allocation to its respective equity index and 5% to Bitcoin, while distributions generated by the equities are reinvested in the cryptocurrency. The announcement does not mean trading has actually begun; Nasdaq’s securities status page listed the funds that day among expected additions. The funds do not invest directly in Bitcoin, but gain indirect exposure through shares of a company-affiliated exchange-traded product and derivatives. Dina Ting, senior vice president and head of index investing at Franklin Templeton, said Bitcoin had “matured as an investable asset,” supported by deepening infrastructure, wider adoption and growing understanding of its role in portfolios.
The funds differ in the indexes they track and their stated fees. FBEQ tracks the VettaFi U.S. Large-Cap 500 Bitcoin DRIP Index, providing exposure to about 500 of the largest U.S. companies by market capitalization, at an annual cost of 9 basis points. FIBT tracks the VettaFi U.S. Innovation 100 Bitcoin DRIP Index, which includes 100 of the largest U.S. issuers listed on Nasdaq, excluding financial companies, at an annual cost of 19 basis points. In both cases, Bitcoin exposure is added to the equity exposure through the index mechanism, while the equity allocation remains at 95% and the Bitcoin allocation at 5% at inception. The company said ordinary and special distributions would be reinvested in Bitcoin at the market open on the day after the ex-dividend date, according to the funds’ prospectus.
The prospectus sets rules for adjusting Bitcoin’s allocation at quarterly rebalancing: if the share exceeds 5%, it is reduced to 4.5%. Between rebalancing dates, if Bitcoin’s share exceeds 20% at the close, it is reset to 4.5% at the close of the second business day after the threshold is breached. This mechanism sets the reduction level when the thresholds specified in the prospectus are reached, while reinvestment of distributions remains part of the index methodology. The quarterly rule and the rule between reviews allow the fund to manage changes in Bitcoin’s share according to predetermined limits. The prospectus states that both the equities and the currency exposure pass through the fund structure and its components, rather than through direct Bitcoin purchases by the funds.
The announcement followed a registration process lasting several months; U.S. Securities and Exchange Commission records show the company filed the initial registration for the two series on June 18, 2026. The amended prospectus filing became effective on October 27, two days before the launch announcement. On October 29, Nasdaq listed the funds among expected additions, distinguishing the announcement and expected listing from confirmation that trading had begun. The company’s disclosure said the funds were newly formed and had limited operating histories, and that investing in them could result in the loss of principal. It also warned of Bitcoin volatility, regulatory uncertainty, operational disruptions and cybersecurity risks.
The company said the funds’ shares could trade at a premium or discount to net asset value, and that brokerage commissions and fund expenses would reduce returns. Jeff Massom of Franklin Templeton said innovation in the ETF market had shifted toward combining exposures within a portfolio, and that the funds offered a different way to combine U.S. equities and Bitcoin. The strategy links equity distributions with exposure to the digital currency, while the funds differ in company coverage and fees. FBEQ brings together large U.S. companies through a broad index, while FIBT focuses on Nasdaq-listed issuers and excludes financial companies. An actual Nasdaq listing remains a separate step from the announcement, as the exchange’s records showed on October 29 that the two additions were expected.