Investors are starved for income. Exchange traded funds tracking both stocks and bonds can offer diversified exposure to market sectors with decent yields in a low-rate environment.

ETFs are an effective tool to capture yield in a portfolio, due to the lower expense ratios, which equals more capital for the investor.

“With bond coupon rates at historic lows, investment categories that offer alternative sources of yield have been among the most popular over the past couple of years. We see this trend continuing into 2012 and feel that investors should take comfort in the academic evidence supporting dividend investing and the total return approach,” Michael Rawson, Morningstar ETF Specialist, wrote in a recent article.

There are several ways to approach income-focused investing. Dividends are the most obvious, however, high-yield bonds are presenting opportunity, as well as emerging market debt. Tom Taulli for InvestorPlace gives us 5 ETF ideas for income seekers:

  • iShares Dow Jones Select Dividend Index (NYSEArca: DVY) There is about $10.2 billion in assets, and the fund tracks an index that focuses on the 100 highest-yielding stocks in the U.S. The yield is 3.3%, and the 0.4% expense ratio is foolproof. [Dividend ETFs In Focus as Companies Raise Payouts]
  • SPDR S&P International Dividend (NYSEArca: DWX) The index holds 100 of the highest yielding stocks overseas. The yield is 6.37% and the cost is 0.45%. [Three Heavyweight International Dividend ETFs]
  • SPDR Barclays Capital High Yield Bond (NYSEArca: JNK) As part of a diversified portfolio, junk bonds can be a great way to increase the overall yield. The 7.27% compensates the risk of default, and the cost is a decent 0.4%.
  • PowerShares Emerging Market Sovereign Debt (NYSEArca: PCY) While risky, emerging markets can provide some nice opportunities to find yield. As the countries continue to grow, they should build stronger credit ratings and make fixed-income investments a good bet. A yield of 5.15% and the 0.5% expense ratio are a nice trade-off. [The Case for Emerging Market Bond ETFs]
  • iShares 20+ Year Treasury Bond (NYSEArca: TLT) This is a safer and more traditional fixed-income investment, with a yield of 3.27% and a safe haven status. The cost is 0.15%.

Tisha Guerrero contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.