TSC Ratings provides exclusive stock, ETF and mutual fund ratings and commentary based on award-winning, proprietary tools. Its "safety first" approach to investing aims to reduce risk while seeking solid outperformance on a total return basis.Mutual funds that invest in real estate stocks dominated our monthly list of worst-rated equity funds, reflecting a property market that continues to flounder. Fifteen of the 25 stock mutual funds that received the lowest grades from TheStreet.com Ratings focus on real estate. All the portfolios lost more than half of their value in the year that ended March 31, earning them our worst grade, E-minus. Thousands of other funds offer better track records and lower risk than these "sell"-rated options. The worst-rated fund of the group, the Kensington Strategic Realty Fund ( KSRAX), holds real estate investment trusts, or REITS. Key holdings include Simon Property Group ( SPG), Equity Residential ( EQR), Boston Properties ( BXP), Vornado Realty Trust ( VNO) and Public Storage ( PSA). Businesses have been closing unprofitable locations to survive a brutal recession, cutting into rent revenue for commercial REITs. On the residential side, lower home prices are encouraging people to buy, hurting rents. The list excludes nine ProFunds portfolios and two Rydex Investments funds that use derivatives to achieve leverage, a strategy that causes excessive volatility. The worst-rated fund would have been ProFunds Banks UltraSector Fund ( BKPIX), which has been reeling from Bank of America's ( BAC) decision to reserve another $6.4 billion for future loan losses. Banks might remain reluctant to lend until they resolve troubled debt on their balance sheets. The International Monetary Fund says U.S. banks have realized losses on $920 billion of bad assets, almost half of the estimated $2.2 trillion total. This suggests we're half way through the banking crisis.