Research/Blueprint 01
Two new ETFs trade your dividends for bitcoin
Two ETFs that started trading on Thursday take the dividends from an ordinary stock portfolio and spend them on bitcoin. Each quarter, any bitcoin above 5% of the fund goes back into stocks.
Franklin Templeton's FBEQ holds the 500 largest US companies and charges 0.09%. FIBT holds the 100 largest Nasdaq companies outside financials and charges 0.19%. Both start at 95% stocks and 5% bitcoin. We tested the rule from January 2016 to October 2026, with SPY standing in for the stocks. It beat SPY. A plain 95/5 mix, reset each quarter, beat it.
How it's wired
The rules come from the summary prospectuses filed on October 27.
Blueprint: two tanks and two pipes
From the summary prospectuses, October 27, 2026. Amber: money going into bitcoin. Grey: bitcoin going back to stocks.
Dividends buy bitcoin. Every regular and special dividend from the stocks is spent on bitcoin at the next open. The stocks never reinvest their own dividends.
The trim. At each quarterly rebalance, if bitcoin is above 5% of the fund it is cut to 4.5% and the rest goes back to stocks. If it is at or below 5%, nothing happens. There is no top-up after a fall beyond the dividends.
The brake. If bitcoin passes 20% at any close, it is cut to 4.5% two business days later. In our test it never fired.
Detail: the bitcoin tank
The three levels that decide when bitcoin is sold, drawn to scale.
Bitcoin rarely sits at 5%
Between rebalances bitcoin moves on its own, so its share drifts. At quarter ends in our test it ran from 2.5% to 13.8%. It was trimmed in 17 of 43 quarters. After a crash it stays low until dividends rebuild it, at about 0.3 points a quarter.
Bitcoin's share of the fund at each quarter end, before the trim
Hypothetical backtest, SPY standing in for FBEQ, January 2016 to September 2026. Amber: the part above 5%, sold back to stocks.
Where the money went
For every $100 invested in January 2016, the fund put $49 into bitcoin: $5 at the start and $44 of dividends. Its trims sent $111 back to stocks. Bitcoin's gains paid the difference.
Into bitcoin, and back out, per $100
Hypothetical backtest, Jan 4, 2016 to Oct 28, 2026.
The returns
From 2016 the rule beat SPY by 3.6 points annualized, and a plain 95/5 mix beat the rule by 0.8 points. The reason is the missing top-up. The mix buys bitcoin back after every fall; the DRIP waits for dividends. Start at bitcoin's 2021 peak and all three finish within half a point. Start at its 2025 peak and plain SPY wins.
Annualized return, three start dates
Hypothetical backtest to Oct 28, 2026. SPY stands in for FBEQ and QQQ for FIBT. No fees, taxes or tracking error. Amber: the best in each group.
The fine print
Taxes. As a regulated investment company, each fund must pay out substantially all of its income. With dividends spent on bitcoin, the prospectus says it may have to sell other holdings to make those payouts, which are taxable.
Plumbing. The funds hold no coins directly. Bitcoin exposure comes through bitcoin ETPs, including Franklin's own, futures or options, possibly through a Cayman Islands subsidiary.
Timing. Trims come once a quarter. Between them bitcoin can run as high as 20% of the fund before the brake.
The bottom line
The DRIP is a bitcoin sleeve on autopilot, not a fixed 5%. Dividends refill it and rallies get sold, but nothing buys the dips. Investors give up dividends compounding in stocks and a full bitcoin weight after a crash. Over our test, that cost 0.8 points annualized against a plain 95/5 mix.
Notes and method. Hypothetical backtest, not live results; past results don't predict future returns. Daily closes and dividend dates from Yahoo Finance for BTC-USD, SPY and QQQ, January 4, 2016 to October 28, 2026. SPY's price return stands in for FBEQ's stocks and QQQ's for FIBT's. We buy bitcoin with dividends at the next close; the fund buys at the next open. The index's own rebalance dates are not public, so we use the last trading day of each quarter. The 20% brake is modelled. SPY and QQQ figures are total returns; the 95/5 mix holds the total-return ETF and is reset to 95/5 at each quarter end. No fees, taxes or tracking error. Fund terms: Franklin US Equity Bitcoin DRIP Index ETF and Franklin US Innovation Bitcoin DRIP Index ETF, summary prospectuses, SEC Form 497K, October 27, 2026 (accessions 0001655589-26-001400 and -001401). First trades October 29, 2026. Not investment advice.