(MONEY Magazine) – In the first seven weeks of this year, individuals poured $6 billion into bond funds, the most for a seven-week period since 1994. This shift suggests that small investors are taking steps to defend against a stock market downturn--but if so, they aren't getting as much protection as they may think they are. About $3.3 billion went into high-yield "junk" portfolios, which despite their 9.3% yields figure to be hit nearly as hard as stocks in a sell-off. If the Federal Reserve follows through on its threat to raise interest rates, both stocks and junk will suffer. Also, since junk bond prices closely follow the outlook for corporate profits, their returns tend to track stock performance (see the chart). "To hedge against a market dip," says Linda Henderson, retail director of fixed income for Minneapolis brokerage Dain Bosworth, "stick with high-grade bonds."

--Amanda Walmac