) -- All but two of the 30 worst-performing stock mutual funds bet against equities during the third quarter, when the

S&P 500 Index

climbed 15%.


Direxion Monthly Small Cap Bear 2X Fund

(DXRSX) - Get Direxion Mo Sm Cap Bear 2X Fd Report

was the group's biggest loser, plunging 40% in the three months that ended Sept. 30. This fund aims to double the inverse performance of the

Russell 2000 Index

, which rose 19% during the period.

Direxion Funds changed the names and strategies of its portfolios last month so they would aim to double the monthly performance of an index, rather than generate 2.5 times their daily returns. While this new approach would imply less leverage and volatility, these funds still rely on aggressive investment techniques and short selling.

TheStreet Recommends

Nine of the 10 contrarian funds listed below earned grades of E-minus, our worst rating. The only exception was the unrated

ProFunds UltraShort Latin America Fund

(UFPIX) - Get ProFunds UltraShort Latin Amer Inv Report

, which has been trading for less than the minimum three years. That fund lost 40% during the quarter by tracking the inverse performance of the

Bank of New York Mellon Latin America 35 ADR Index

with 200% negative leverage.

To find the best rated stock mutual funds, check out our

Top-Rated Mutual Funds


-- Reported by Kevin Baker in Jupiter, Fla


Kevin Baker became the senior financial analyst for TSC Ratings upon the August 2006 acquisition of Weiss Ratings by, covering mutual funds. He joined the Weiss Group in 1997 as a banking and brokerage analyst. In 1999, he created the Weiss Group's first ratings to gauge the level of risk in U.S. equities. Baker received a B.S. degree in management from Rensselaer Polytechnic Institute and an M.B.A. with a finance specialization from Nova Southeastern University.