Record small-cap fund inflows raise questions on equity portfolio risk

People who invest in mutual funds in India got some interesting news about July.

A mutual fund is a big basket where many people put their money together to buy stocks and other investments.

Funds that invest in small companies, called small-cap funds, received a record amount of new money - about ₹7,768 crore.

Funds that invest in mid-sized companies also received a lot of money, about ₹6,192 crore.

Meanwhile, funds that invest in big companies, called large-cap funds, saw people take money out for the first time in 30 months.

A financial expert named Subhendu Harichandan says this does not mean everyone should rush to put money into small-cap funds.

He says investors should spread their money across big, mid-sized, and small companies.

He suggests putting 55% into large companies, 25% into mid-sized companies, and 20% into small companies.

He warns against putting most of your money into whatever is trending, because that can be risky.

The best plan is a balanced portfolio that fits your goals and how much risk you can handle.