This figure is calculated by weighting each bond's coupon by its relative size in the portfolio.
Benefits
This figure indicates whether the underlying fund owns more high- or low-coupon bonds. There can be advantages to holding higher coupon bonds, but many funds buy them simply to tempt investors with a high payout. This can be damaging to investors for two reasons. The first is that higher-coupon bonds often carry greater risk than lower-coupon issues. The second is that when these bonds don't carry extra risk, they are old issues that the fund has paid up for and if the offering doesn't amortize the extra yield, investors are likely to find that their principal erodes over time.
Origin
Morningstar generates this figure using the fund's portfolio, and weights each bond's coupon rate by the holding's relative size in the portfolio.
For the Pros
This information can be helpful in planning a hedge position in a portfolio.