Franklin Templeton’s Dividend-to-Bitcoin ETFs Open on Nasdaq With About $72,000 in Trades

Franklin Templeton’s FBEQ and FIBT, two ETFs whose indexes reinvest their companies’ dividends in bitcoin, drew about $72,000 of trading in their first Nasdaq session on Thursday, Oct. 29, by Unchained’s calculation from Nasdaq’s daily trading data.

FBEQ accounted for 2,461 shares, about $62,000 at its $25.28 close, and FIBT for 399 shares, about $9,800 at its $24.52 close.

The Franklin US Equity Bitcoin DRIP Index ETF (FBEQ) charges 0.09% a year and the Franklin US Innovation Bitcoin DRIP Index ETF (FIBT) charges 0.19%, with no 12b-1 distribution fee on either, according to the FBEQ summary prospectus and FIBT summary prospectus filed with the SEC on Oct. 27. Both prospectuses name the same four portfolio managers, Dina Ting, Hailey Harris, Joe Diederich and Basit Amin, drawn from investment manager Franklin Advisory Services and sub-adviser Franklin Templeton Institutional.

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The prospectuses don’t list bitcoin itself among the funds’ bitcoin investments. Each fund aims to mirror its index’s bitcoin weight with three kinds of investments: bitcoin exchange-traded products, which can include ones sponsored by Franklin affiliates; futures and options on bitcoin or on those products; and depositary receipts representing ownership of bitcoin. Part of that exposure may be held through a wholly owned Cayman Islands subsidiary.

Both indexes are run by VettaFi. FBEQ tracks the VettaFi US Large-Cap 500 Bitcoin DRIP Index, built from large U.S. companies. FIBT’s index draws on the VettaFi US Innovation 100 Index, 100 Nasdaq-listed U.S. companies chosen by market value with financial firms excluded. Each index opened with 95% in stocks and 5% in bitcoin, and every regular or special dividend its companies pay is put into bitcoin at the next market open after the ex-dividend date, so dividends add to the bitcoin weight between rebalances.

That weight is checked every quarter. Above 5%, it is cut to 4.5%; at 5% or less, it stays put. If bitcoin tops 20% at any close between quarterly reviews, the index resets it to 4.5% at the close two business days later.

Franklin first filed for the two funds on June 18. It registered the shares for trading on Nasdaq with a Form 8-A on Oct. 22, and the final prospectuses are dated Oct. 27.

Because dividends land in bitcoin between rebalances, how far each fund’s bitcoin weight climbs past 5% in a given quarter will depend on its companies’ payouts and on bitcoin’s price.

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