Bitcoin Dividend ETF: Franklin's 95/5 DRIP Funds at 0.09%

What is a bitcoin dividend ETF?

Most funds that advertise a "bitcoin dividend" pay you cash. Franklin Templeton's two Bitcoin DRIP funds do the opposite: they collect the dividends of the stocks they hold and turn them into bitcoin exposure inside the fund.

Franklin first filed the pair with the SEC in June (CoinDesk, The Block) and moved them to an effective prospectus (Form 485BPOS) in October:

The prospectus lists the innovation fund on Nasdaq under FIBT. As of October 26, neither fund had begun trading. Both indexes are rules-based and calculated by VettaFi.

How do Franklin's Bitcoin DRIP ETFs work?

DRIP stands for dividend reinvestment plan. A normal DRIP buys more of the stock that paid the dividend. Here the index instead reinvests all regular and special dividends into bitcoin at the market open on the day after each ex-dividend date, per the filing. The fund can hold that exposure through bitcoin exchange-traded products, futures, options or similar instruments, not by holding coins directly.

Three rules keep the bitcoin sleeve in check:

• Quarterly review: if bitcoin is above 5% of the index, it is cut back to 4.5%. At or below 5%, it is left alone, so dividends rebuild it.
• Hard cap: bitcoin can never exceed 20% between reviews; a breach is corrected outside the schedule.
• One-way flow: dividends only ever go into bitcoin. Equity weight shrinks only through price moves and the trims above.

A worked example, using round numbers rather than any forecast: on a $10,000 position, $500 sits in bitcoin. If bitcoin rose 50% in a quarter while stocks were flat, the sleeve would be worth $750, or 7.3% of $10,250. The next review sells it back to 4.5%, about $461, and moves the rest into stocks. In a falling bitcoin market nothing is bought back at the review; only the dividends add to the sleeve.

How much does the Bitcoin DRIP ETF cost?

The large-cap fund's prospectus shows a 0.09% management fee, no 12b-1 fee and 0% other expenses, for total annual operating expenses of 0.09% (SEC filing). That is $9 a year on $10,000, less than half the 0.19% Franklin charges on its spot fund EZBC and below the cheapest spot bitcoin ETF in our list of all 12 US spot funds.

The headline fee is not the whole cost. If the fund holds its bitcoin through futures, it pays the roll each month the way BITO does; if it holds spot ETPs, the sponsor fee of the product it buys sits underneath. The prospectus allows either, so the true cost of the 5% sleeve depends on what the manager chooses.

Is this the same as BITO's dividend?

No. BITO holds bitcoin futures and pays monthly cash distributions out of futures gains, which we explain in BITO's dividend and yield. Franklin's funds hold ordinary stocks and keep the dividend inside the fund as bitcoin exposure. One sends income out; the other turns income into a growing crypto position. Neither is a spot bitcoin ETF: those hold coins and pay nothing.

What it means for investors

This is a stock index fund with a small, rules-capped bitcoin sleeve, not a bitcoin fund. With 95% in equities, the 500 large-cap stocks drive the daily return; the bitcoin leg matters most when it moves sharply, and the quarterly trim to 4.5% sells strength rather than buying weakness. A holder who wants a fixed 5% can build it with a stock index fund and a spot fund such as EZBC, at the cost of rebalancing by hand.

For the spot leg, Pre-Tick measures the price you actually trade at. Across 60 sessions from July 31 to October 23, our pre-market estimate for EZBC landed a median 0.055% from the official 9:30 AM open, against 0.875% for simply using the prior close, and within ±0.5% in 98% of sessions (accuracy). If the DRIP funds end up holding futures instead, check the live basis on our futures roll cost page before assuming the 0.09% fee is the full bill. Weekly spot flows, including EZBC's, are in this week's Bitcoin ETF flows. This is market analysis, not investment advice.