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Franklin Templeton just filed for two ETFs that do something no fund has done before: take the dividends your stocks generate and use them to buy Bitcoin instead of more shares.
The asset manager submitted registration statements with the SEC on June 19 for the Franklin US Equity Bitcoin DRIP Index ETF and the Franklin US Innovation Bitcoin DRIP Index ETF. Both target an effective launch date of September 1, 2026.
How the DRIP mechanism works
DRIP stands for Dividend Reinvestment Plan, a well-established concept in traditional finance. Normally, a DRIP takes the cash dividends your holdings spit out and uses them to buy more of the same stock or fund.
Franklin’s version rewires that plumbing. Instead of recycling dividends back into equities, these funds route all dividend income directly into Bitcoin exposure.
The initial portfolio split is roughly 95% US equities and 5% Bitcoin. One fund targets large-cap stocks, the other focuses on innovation-themed companies. Both will track newly created VettaFi “Bitcoin DRIP” indices designed specifically for this strategy.
For the Bitcoin allocation itself, the funds plan to use spot Bitcoin exchange-traded products, futures, and options.
Built-in guardrails for volatility
Franklin built in a quarterly rebalancing mechanism with asymmetric rules.
If Bitcoin rallies hard and its weighting drifts above the 5% target, the fund trims it back to 4.5% at the next quarterly rebalance.
There’s also a hard cap at 20% Bitcoin allocation. Even in a scenario where Bitcoin goes parabolic between rebalancing dates, the fund won’t let crypto exposure exceed one-fifth of the portfolio.
Franklin’s growing Bitcoin playbook
Franklin Templeton already runs the EZBC spot Bitcoin ETF, which had accumulated approximately $359 million in net assets and around $330 million in cumulative inflows as of the filing date.
The filing is still preliminary. No fee structure has been disclosed, which will be a critical variable in determining how competitive these products are. The SEC process also means the September 1 target date is an earliest possible launch, not a guarantee.
What this means for investors
US large-cap stocks currently yield in the ballpark of 1-2% annually. On a $10,000 investment, that’s maybe $100-200 per year flowing into Bitcoin automatically.
The 20% hard cap and quarterly trimming mechanism do mean the fund becomes a systematic seller during Bitcoin rallies. Investors who want pure, uncapped Bitcoin exposure should stick with dedicated products like EZBC or its competitors.
Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.
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