While equity mutual funds remain dominant in India, Franklin believes investors are under-allocated to debt and will increasingly value fixed income as a portfolio stabilizer. The expansion plan is expected to unfold over the next three to five years.
Franklin Templeton is betting that Indian investors’ rising interest in fixed income will power the next leg of its growth in the country, where it is regaining ground after a credit crunch six years ago.
The fund manager, which oversees more than ₹1.2 lakh crore ($12.6 billion) of assets in the country, is expanding its fixed income offerings while also launching new products across retirement schemes, specialized investment funds and alternatives, said Avinash Satwalekar, president of Franklin Templeton Asset Management (India) Pvt Ltd.
Right now, equities make up around 90% of Franklin’s mutual fund assets in India, said Satwalekar. The aim: to get that down to around 60% without shrinking the firm’s exposure to equities. That will require a big growth in fixed income assets.
Recovery strategy after 2020 debt fund crisis
The strategy is part of Franklin Templeton’s efforts to move past the fallout of a painful period in 2020, when it shut six debt funds after freezing investor withdrawals due to a liquidity crunch. The local regulator barred it from offering new debt funds for two years and imposed a fine.
The asset manager faces stiff competition. Local fund houses including HDFC Asset Management Company Ltd. and ICICI Prudential Asset Management boast expansive distribution networks. Global rivals are also in the fight: BlackRock Inc. joined forces with Mukesh Ambani’s group around three years ago, while Jefferies Financial Group Inc. has also made plans to enter the market.
Three-to-five-year roadmap for debt fund expansion
Franklin Templeton’s renewed push into debt funds is expected to take place over the next three to five years. It plans to build assets in money markets and corporate bonds in medium- to long-term tenors, said Satwalekar, a 30-year veteran of the US-based company.
The fund house has built out its credit strategy into a long term alternatives business over the last year. It raised over 5 billion rupees for its credit alternatives fund and plans to expand that segment further. Satwalekar said the firm is looking to tap new customer segments in smaller towns and also boost its offerings through the low-tax hub of Gujarat International Finance Tec-City or GIFT City.
Competitive pressure in India’s debt market
Analysts said Franklin Templeton may still struggle to make a big dent in fixed income schemes. “Competition is much more pronounced in debt mutual funds because of the limited set of institutional investors and large bank-backed mutual funds,” said Nirav Karkera, head of research at discount broker Groww’s wealth management arm W.
Franklin may also need to convince some investors to wake up to fixed income. Equity mutual funds are still wildly popular in India. Inflows accelerated in March as individual investors poured record amounts into monthly recurring plans despite heightened geopolitical tensions and market volatility.
But Satwalekar is optimistic. He said investors became under allocated to debt instruments following a prolonged stock market boom in India, and will see the appeal of the relative safety of debt markets.
“People forget fixed income is a critical part of a portfolio — it acts as a shock absorber,” he said.
Franklin Templeton stepped up hiring in India over the past few years. It launched a debt fund in 2024, managed by Rahul Goswami, who joined as chief investment officer from ICICI Prudential Asset Management Co.
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Published on May 12, 2026