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The mutual fund sector is finding a major improvement in investor base amid the pandemic with industry's total asset under management (AUM) increasing 2.1 per cent (Rs 70,000 crore) month-on-month (MoM) in May, 2021 to Rs 33,10,000 crore, a report by a brokerage house said on Tuesday.

According to the Fund Folio report by Motilal Oswal Financial Services, the increase in MF industry's AUM was primarily led by a MoM increase in AUM of equity funds, other ETF funds, and balanced funds.

But, liquid funds and income funds posted a decrease MoM, the report said.

Equity AUM (incl. ELSS and index funds) of domestic MFs increased 7.7 per cent MoM to Rs 11,10,000 crore in May, 2021 on account of a rise in market indices (Nifty up 6.5 per cent MoM) and an increase in equity scheme sales (up 15 per cent MoM to Rs 27,700 crore).

Furthermore, redemptions decreased 18.6 per cent MoM to Rs 17,200 crore. This led to an increase in net inflows to Rs 10,500 crore in May, 2021, the highest since March, 2020, the brokerage said.

In April, 2021 (down 0.4 per cent MoM), the Nifty headed north in May, 2021 (up 6.5 per cent MoM) to close at an all-time high of 15,583. The rally was propelled by strong FII inflows in the second half of the month and steady decline in daily Covid-19 cases in India, as well as supported by strength in other Asian stock markets.

FII inflows were back and stood at $ 0.7b. DIIs saw inflows for the third consecutive month at $ 0.3b.

The brokerage report said that the total equity value of the top 20 AMCs increased 7.2 per cent MoM (+59.2 per cent YoY) in May, 2021 v/s a rise of 6.5 per cent MoM (+62.7 per cent YoY) in the Nifty.

Among the top 10 funds, the highest MoM increase was seen in Kotak Mahindra Mutual Fund (8.1 per cent), SBI Mutual Fund (7.7 per cent), Mirae Asset Mutual Fund (7.6 per cent), HDFC Mutual Fund (7.6 per cent), and DSP Mutual Fund (7.5 per cent).

Also, in May 2021, as per the report, MFs showed interest in PSU Banks, Oil & Gas, Automobiles, Capital Goods, Insurance, and Private Banks, leading to a MoM increase in their weights. Healthcare, Metals, Consumer, Technology, Telecom, Chemicals, Consumer Durables, and Cement reported MoM decline in weights. Private Banks (18 per cent) was the top sector holding for MFs in May'21, followed by Technology (11 per cent), Healthcare (7.6 per cent), and NBFCs (7.4 per cent). Media, PSU Banks, Insurance, Oil & Gas, and Capital Goods saw the maximum increase in value MoM.

The highest MoM net buying in May, 2021 was seen in SBI Life Insurance (+41 per cent), Hero MotoCorp (+19 per cent), JSW Steel (+10.6 per cent), ONGC (+4.1 per cent), and HDFC (+2.9 per cent), according to the report.

Among the Top 25 schemes by AUM, HDFC Small Cap Fund (+10.7 per cent MoM change in NAV), HDFC Flexi Cap Fund (+10 per cent MoM), Nippon India Small Cap Fund (+8.4 per cent MoM), HDFC Top 100 Fund (+8.4 per cent MoM), and ICICI Pru Value Discovery Fund (+7.1 per cent MoM) reported the highest increases.

Also, MOFSL report said that in May, 2021, 6 of the top 10 stocks that saw the maximum increase in value were from the BFSI space. SBI, HDFC Bank, ICICI Bank, Reliance Industries, HDFC, L&T, SBI Life Insurance, Infosys, Axis Bank, and Maruti Suzuki increased the most in terms of value MoM.

Stocks that saw the maximum decline in value MoM were JSPL, Cholamandalam Investment & Finance, Deepak Nitrite, Tata Chemicals, Britannia Industries, Tata Steel, Info Edge, Linde India, Navin Fluorine, and Tata Consumer.