There is a mad dash to find yield these days. Some are replacing portions of their bond allocation with dividend stocks to get a better yield. Others are choosing long-term bonds in an attempt to capture yield. Both of these options have the potential to increase your yield, but carry added risk.

One option overlooked is the use of foreign bonds. Over the past few years, many of these foreign bonds have beat U.S. based bond ETFs such as Vanguard's Total Bond Fund (BND). These bonds offer attractive yields in the 3-5% range and a way to diversify your bond allocation. With the use of ETFs, these bonds can be very specialized in terms of country, region, developed market vs. emerging market, local currency vs. U.S. currency, and corporate vs. government. Here are a few examples to consider.

PowerShares Emerging Markets Sovereign Debt Portfolio (PCY):

This ETF is U.S. dollar

WisdomTree, the firm behind an already robust suite of international fixed income ETFs, announced on Thursday the launch of another first-to-market fund that expands the universe of bonds available to U.S. investors. The new Emerging Markets Corporate Bond Fund (EMCB) will be an actively-managed ETF that offers exposure to dollar-denominated corporate bonds from issuers in the developing world. The new ETF will be actively managed, with Western Asset Management serving as the sub-advisor and the JPMorgan Corporate Emerging Markets Bond Index Broad serving as the benchmark. EMCB will utilize a top down macro analysis combined with fundamental credit research.

Unique Opportunity In Emerging Markets

EMCB is the first U.S.-listed ETF to exclusively target debt of emerging market corporations; the existing ETF lineup included products such as the PowerShares International Corporate Bond Portfolio (PICB) and the SPDR Barclays Capital International Corporate Bond ETF (IBND), both of which hold exclusively

Just a few years ago there were only a handful of bond ETFs available to U.S. investors, and almost all of them focused on securities from U.S. issuers denominated in U.S. dollars. One of the most noteworthy innovations to shape the ETF industry over the last several years has been a significant growth in international bond products; as issuers have worked around concentration-related issues and other hurdles, the universe of bond ETPs targeting markets beyond U.S. borders has grown tremendously.

The current economic environment has no doubt contributed to the growth of international bond ETFs; paltry yields on U.S. debt and concerns over the long-term outlook for the euro have understandable sparked interest in ex-U.S. bonds as a way to both boost yields and diversify away some risk [see Better-Than-AGG Total Bond Market ETFdb Portfolio].

With dozens of international bond ETPs now on the market, investors have the flexibility