Exchange traded funds tracking the S&P 500 and Dow Jones Industrial Average suffered declines of more than 4% in Thursday’s stock market thumping.

Yet in the bond ETF universe, the steep pullback in high-yield corporate bond funds was another example of the “risk off” trade in force on Thursday.

For example, SPDR Barclays Capital High Yield Bond ETF (NYSEArca: JNK) and iShares iBoxx High Yield Corporate Bond Fund (NYSEArca: HYG) absorbed losses of about 3%. The move shows investors were scaling back risk in all parts of their portfolios.

Both high-yield ETFs sliced below their 200-day moving average.

With the economy so fragile, “we think the situation for highly leveraged companies leaves this fund suitable for only the most risk-seeking of investors,” wrote Morningstar analyst Timothy Strauts in a profile of SPDR Barclays Capital High Yield Bond ETF. The economy was improving earlier this year “but any hiccups will most likely send this fund plummeting once again.” [Plunge in High-Yield Bond ETFs Rattles Nerves]

The iShares iBoxx High Yield Corporate Bond Fund fell sharply in 2008 when the credit meltdown shook markets.

iShares iBoxx High Yield Corporate Bond Fund

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