All investors are different, every investment is unique. Before deciding on the number of mutual funds, you have to identify your financial goals and invest accordingly.
There is no perfect portfolio that would work for everyone. You have to be prepared by doing proper research and finding out what works for you.
Therefore, unless you are very well versed with the markets and have expertise in mutual funds, a good rule of thumb would be to own.
In a debt category, one or two funds are good. You must reflect on your time horizon and associated taxation.
You can select one index fund or a combination of two funds in a large-cap category. If you add another fund, there will be a high level of overlap in the large-cap portfolio.
You should invest in two small-cap and two mid-cap funds. Usually, the overlap in these categories is low if the chosen funds have a different strategy (value/growth).
In the case of a foreign mutual fund, one fund is fine as far as the underlying is an index of a foreign country (NASDAQ/NYSE).
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