Franklin Templeton, one of the world's largest asset managers with $1.8tn in assets under management, has revealed that it has registered two funds that automatically reinvest their dividends earned from U.S. stocks into Bitcoin-related assets.
The two funds are named the Franklin US Equity Bitcoin DRIP Index ETF (FBEQ) and the Franklin US Innovation Bitcoin DRIP Index ETF (FIBT).
Rather than focusing on tracking the price of the flagship cryptocurrency like most spot Bitcoin ETFs, the new ETFs will offer a combination of U.S. stock market exposure with a strategy that seeks to slowly accumulate Bitcoin.
For starters, the two funds will hold 95% of their portfolio in U.S. equities, with the other 5% in Bitcoin-related assets.
How Franklin Templeton's Bitcoin ETFs will work
A significant aspect of the two new funds revolves around their dividend reinvestment process, also known as DRIPs.
Traditional DRIPs automatically reinvest stock dividends to buy more shares of the respective companies.
In this case, the two new products from Franklin Templeton will reinvest those dividends into Bitcoin exposure.
Specifically, both regular and special dividends will be reinvested in Bitcoin-related assets on the next trading day after the ex-dividend date.
The two funds aim to slowly grow their Bitcoin exposure without investors having to buy any cryptocurrency assets themselves.
Franklin Templeton expands Bitcoin footprint
The new development from Franklin Templeton is another step in its journey of expanding crypto investment opportunities.
Currently, the asset management giant offers the Franklin Bitcoin ETF (EZBC), a spot Bitcoin investment product. The spot Bitcoin ETF has seen cumulative net inflows of roughly $335mn.
However, the two new products represent a new way of integrating cryptocurrencies into traditional investment portfolios.