The lackluster stock market performance so far this year reportedly may foreshadow a weak year for equity fund investors who subscribe to a theory known as the January effect.

Historic stock market returns suggest equity fund performances in January should be bullish because investors tend to make new purchases after portfolio managers declare year-end capital gains dividend payments.

But this year, funds could hemorrhage $3 billion in January, making this only the second time in 15 years when the fund industry has bled assets before February, according to TrimTabs Investment Research.

Researchers recorded $371 million of outflows during January 2003, when investors sat out of the market to wait out the Iraq war that had begun two months later. By comparison, in January 2004, mutual funds soaked up $44 million of inflows and proceeded to enjoy a banner year.

The biggest losers so far are domestic equity funds, which are expected to bleed $6.8 billion by the end of the month. Foreign funds based in the U.S., by comparison, are on track to absorb $3.8 billion during the same period.

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