Sluggish Tone Prompts Many Managers to Focus On Interest Payments Rather Than Price Gains
NEW YORK -- In the bond market, it's back to "coupon clipping."</br></br>The credit markets' sluggish tone is prompting many fixed-income portfolio managers to stop hunting for the next big price gain. Instead, their investment strategy is to focus on fat interest payments.</br></br>Now that the bond rally has stalled, "it's time to start clipping coupons," says Paul Suckow, director of fixed-income securities at Oppenheimer Management Corp. "That's one way to keep your total return high when the market is going nowhere."</br></br>It's a big switch. Just six weeks ago, long-term Treasury bonds were the hottest fixed-income investments around. As interest rates tumbled, bond prices soared and helped fixed-income money managers post impressive double-digit returns for the three months through July.</br></br>The term coupon clipping doesn't mean what it used to. It derives from the detachable stub on a bond certificate that, in the past, was presented in return for semiannual interest payments. But coupons are few in the computer age: Interest payments are speeded along through electronic transfers.