A report from investment research firm Morningstar Canada debunks the popular theory that January sets the tone for the year. This is good news for fund investors considering 26 of 32 Morningstar Fund Indices rang up negative returns for the month. Overall, the 88% of all funds were in the red for January.

Morningstar examined median returns of Canadian fund categories in light of the widely circulated theory that “as goes January, so goes the year.”

“While U.S. Equity funds have shown a tendency to follow January’s performance, Canadian and International Equity funds have not demonstrated the same relationship,” said Morningstar’s Rob Chang.

While the calendar year returns of U.S. Equity funds followed the trend of their January returns in 14 of the last 15 years, Canadian and International Equity funds have only mimicked their January performances in nine out of the last 15.

“The results for Canadian and International Equity funds are a little better than random chance and do not show any notable correlation,” says Chang. “Instead, for all funds, investors should look at other factors such as global economic policies and the impact of rising oil prices on manufacturing.”

The top fund category in January was the Canadian Income Trust Fund Index at 1.5%, followed by the High Yield Bond Fund Index at 0.8% and the Real Estate Fund Index at 0.4%.

The International Equity Fund Index had the worst returns in January with a loss of 7.4%. It was just behind the European Equity Fund Index down 7% and the Latin American Equity Fund Index down 6.7%.

The Canadian Equity Fund Index was in the middle of the pack losing 2%, just behind the Canadian Balanced Fund Index at -1.8%.

The Canadian Money Market Fund Index was positive at 0.2%, while the Global Equity Fund Index fell 5.6%, the Canadian Bond Fund Index lost 0.6% and the U.S. Equity Fund Index lost 5%.

CI Mutual Funds Inc. now has the most five-star rated funds, pushing Mackenzie Financial Corp. out of that spot for the first time in 16 months. CI has 30 five-star funds compared to Mackenzie’s 29.

On a percentage basis, I.A. Michael Investment Counsel Ltd., the manager of ABC funds, continues to lead the pack with five stars for all three of its rated funds.