What should you do with your money now? Franklin Templeton's tips for 2025

While financial markets across the world sway under the weight of trade tensions, softening growth, and rising uncertainty, investors are asking the one question that matters most: What should I do with my money now?

 

Franklin Templeton's May 2025 investor letter says embracing diversification and maintaining a long-term investment horizon, can navigate the complexities of today's world with confidence.

 

Here are the key points from the letter written by Avinash Satwalekar, President, Franklin Templeton Asset Management (India)

 

 Markets are jittery, but resilience is a pattern:

Recent global volatility—driven by rising U.S. tariffs and geopolitical events—has unsettled stock markets. But Franklin Templeton reminds investors that history is on their side. Markets have bounced back from crises before, and patience pays off.

 

"History shows that markets recover over time. It reinforces the value of a long-term approach based on resilience, diversification, and strategic planning."

 

In times of uncertainty, diversification remains a cornerstone of prudent investing

 

"By spreading investments across various asset classes and geographies, investors can balance risk and potential returns. This strategy not only mitigates the impact of disruptions but also positions portfolios to capitalize on growth opportunities worldwide."

 

India: A bright spot amid global gloom

Despite the global slowdown, India continues to shine. The IMF forecasts India to be the fastest-growing major economy in 2025, backed by strong economic fundamentals and relatively low inflation.

 

" The weak market performance in FY25 has largely bridged the gap between earnings growth and equity returns, particularly in large caps. So large-cap valuations are relatively attractive, while mid and small-cap segments remain above their long-term averages. Overall, we have a cautious outlook on both global and domestic markets. Despite this, we continue to highlight the importance of equities as a long-term asset class. Considering the current global uncertainties, a diversified approach is advisable, and hybrid funds may offer optimal risk adjusted returns during such uncertain times. This phase requires discipline and patience," said  Satwalekar.

 

Key takeaways from the India equity outlook:

 

• India’s GDP growth continues to outpace global peers.
• FY25 earnings are muted, but large-cap valuations are now attractive.
• Equity markets may consolidate, not soar—suggesting a time for strategy, not speculation.
• Sectors like financial services remain strong; IT under pressure due to US exposure.

 

“India’s growth story is intact,” said Ajay Argal, Senior VP at Franklin Templeton. “But the momentum will be steady, not dramatic.”

 

Fixed Income: Time to revisit Debt Funds?

For conservative investors or those looking for diversification, fixed income funds are coming back into focus:

 

• India’s CPI inflation is at a 5-year low (3.16%), giving the RBI room to ease rates further.
• A 25 bps rate cut in May and an accommodative stance have buoyed bond markets.
• Duration funds, which benefit from falling yields, are performing well.
• RBI’s ₹2.69 lakh crore surplus dividend to the government may boost market liquidity further.
• Franklin Templeton has increased duration across its debt portfolios since March 2025 to align with this trend.

 

Global Markets: Volatility creates value

While global markets remain mixed, Franklin Templeton urges investors to look past the panic:

 

• AI stocks are volatile, but offer long-term upside for brave investors.
• U.S. Fed has paused rate hikes, showing caution in uncertain times.
• Select emerging markets and tech sectors present long-term potential.

 

“Fear creates opportunity. Valuations are more attractive now, and this may be one of those moments,” the letter notes.

 

 What this means for you:

• Diversify your portfolio – across equity, debt, and geography.
• Consider hybrid or balanced funds to manage risk better.
• Review your SIPs – continue if your goals are long term.
• Use volatility to your advantage – consider phased investing or staggered lumpsum entries in equity markets.
• Revisit duration and bond funds – falling yields favour long-term debt investors.