Bond assets play an important role in any traditional investment allocation strategy, but now, investors may utilize exchange traded funds to diversify away from U.S. debt and gain exposure to emerging market bonds. Emerging market bond ETFs are also offering attractive yields.

In the emerging market bond ETF space, the iShares JPMorgan USD Emerging Markets Bond Fund (NYSEArca: EMB) is the largest option available, with about $5.5 billion in assets under management. The fund tries to reflect the performance of the J.M. Morgan EMBI Global Core Index, which is market-value-weighted based on countries with the most debt and is comprised of U.S. dollar denominated emerging markets bond securities. [Emerging Market Bond ETFs with Attractive Yields]

EMB has a 0.60% expense ratio, a 3.68% 30-day SEC yield, average maturity of 12.1 years and an effective duration of 7.7 – each 1% rise in rates will diminish EMB’s price by about 7.7%.

Credit quality allocations include AA 1.7%, A 6.0%, BBB 46.7%, BB 15.7% and B 13.4%. Country allocations include Brazil 7.4%, Russia 7.1%, Mexico 7.0%, Philippines 6.8%, Turkey 6.7%, Indonesia 6.5%, Venezuela 4.9%, Colombia 4.9%, Peru 4.2% and Poland 4.1%.

Additionally, the PowerShares Emerging Markets Sovereign Debt Portfolio (NYSEArca: PCY) follows the DB Emerging Market USD Liquid Balanced Index, which is equally weighted among 22 emerging market countries and holds a basket of U.S. denominated emerging market debt.

PCY has a 0.50% expense ratio, a 4.47% 30-day SEC yield, an average maturity of 15.4% and an effective duration of 9.45.

Credit quality allocations include AA 4.5%, A 8.2%, BBB 39.5%, BB 30.6%, B 11.8% and below B 4.4%. Country exposure include Bulgaria, Brazil, Columbia, Croatia, El Salvador, Hungary, Indonesia, South Korea, Lithuania, Mexico, Panama, Peru, the Philipppines, Pakistan, Poland, Qatar, Russia, South Africa, Turkey, Ukraine, Uruguay, Vietnam and Venezuela.

More recently, the fund industry has come out with emerging market bond ETFs that are denominated in their local currencies. In comparison to the US dollar-denominated funds, the newer ETFs include a heavier exposure to investment grade debt. Additionally, it should be noted that these ETFs will be exposed to currency risks – if the foreign currency depreciates, your ETF will also take a hit, but an investor stands to benefit if the U.S. dollar begins to weaken.

The iShares Emerging Markets Local Currency Bond Fund (NYSEArca: LEMB) tracks the Barclays Emerging Markets Broad Local Currency Bond Index, which uses a market value-weighted methodology that weights holds emerging market sovereign debt that is denominated in the issuer’s own domestic currency.

LEMB has a 0.60% expense ratio, a 4.59% 30-day SEC yield, an average maturity of 6.06 years and a 4.19 effective duration.

Credit ratings include AA 4.3%, A 28.8%, BBB 6.8% and BB 5.2%. Top country allocations include South Korea 20.8%, Brazil 11.7%, Mexico 7.6%, Poland 6.2%, South Africa 4.5%, Russia 4.5%, Czech Republic 4.4%, Malaysia 4.4%, Thailand 4.4% and Turkey 4.4%.

The Market Vectors Emerging Markets Local Currency Bond ETF (NYSEArca: EMLC) tries to reflect the performance of the J.P. Morgan GBI-EMG Core Index, which only includes fixed-rate bonds with a maturity of over 13 months and each country weighting is capped at 10%.