New Delhi, Aug. 12 -- Small-cap mutual funds attracted a record Rs.7,768 crore in July, while large-cap funds saw their first monthly outflow in 30 months. Mid-cap funds also remained popular, attracting Rs.6,192 crore during the month.

The sharp divergence raises a question for investors: should record inflows into small-cap funds prompt them to increase their own allocation to the segment?

Subhendu Harichandan, executive director at Anand Rathi Wealth Ltd, said investors should not determine their small-cap allocation simply by looking at how much they hold in dedicated small-cap funds. They need to consider their exposure across their entire equity portfolio.

"Investors should look through the underlying portfolio of each fund and a...