For goals related to a child that have a long-term horizon of 10-15 years, which one would be the right choice of fund to invest in - multi-cap (now flexi-cap) or small-cap for generating more returns? Further, in an ideal portfolio, how much percentage allocation should be done in international funds?
The choice between multi-cap (now flexi-cap) and small-cap in your first question is quite a dilemma. If you get unsettled by the ups and downs of the market, then a multi-cap (now flexi-cap) fund would be the right choice. But for longer horizons of around 10-15 years, and after investing in the markets if you can forget about it and stay unperturbed by the uncertainty in the equity markets, then you can invest in small-cap funds.
This would be the case for any particular goal, since from an investing perspective the most important thing is the investment horizon. As per the question, you seem to be clear about not requiring the money before the end of about 15 years. In such a scenario, small-cap funds would tend to give you higher returns but they would be quite volatile in nature. Multi-cap funds (now flexi-cap) would also give you good returns, though not as high, but they would be a little less volatile as they are more diversified in nature. This should be the basis for any decision you make.
To answer your second question regarding international funds, in case you have never invested in them, then you can invest about 15-20 per cent of your portfolio in them. But you do not need to consider international funds as a different entity. You should consider them as part of your overall equity fund allocation. Through equity mutual funds, you get part of the ownership of a business. Residing in India makes us prone to home-bias, otherwise international funds should be considered as part of your equity fund allocation. To start with, an investor can allocate up to 15-20 per cent of the portfolio and over a period of time, as you gain confidence in them, you may decide to increase your allocation or keeping it the same is also enough.