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January 3, 2013

Advocating Direct Investments through Education

Top Stories

Merrill Lynch sells nontraded REIT, citing mass-affluent demand
Bank of America Merrill Lynch has begun selling the Jones Lang LaSalle Income Property Trust, a nontraded real estate investment trust. The offering marks the first time a major wirehouse has sold a nontraded REIT. "We believe there is significant demand for an attractive, direct core real estate investment product among mass-affluent investors," said Keith Glenfield, head of alternative investments at Merrill Lynch. InvestmentNews (free registration) (1/2)

"Fiscal cliff" bill clears Congress
The House voted 257-167 to adopt the Senate's bill to avert "fiscal cliff" tax increases for most Americans. The measure prevents $600 billion of spending cuts and tax hikes from automatically taking effect. House Republicans gave up on demands for spending cuts that likely would have been blocked by the Senate. Bloomberg (1/1), The Washington Post (1/1), Los Angeles Times (tiered subscription model)/Politics Now blog (1/1)

Policy Update

SEC gives broker-dealers responsibility for unclaimed securities
A new Securities and Exchange Commission rule requires broker-dealers to track down customers who fail to cash checks for dividend payments, interest payments or other distributions of $25 or more. The Washington Post (12/27)

Khuzami reportedly will step down as SEC enforcement chief
Robert Khuzami, who has headed up the Securities and Exchange Commission's enforcement unit since 2009, plans to leave the agency as soon as this month, sources say. Under his watch, the unit's power has expanded, but he was also criticized for reaching high-profile settlements with Goldman Sachs, Citigroup and JPMorgan Chase. Bloomberg (12/20), The Wall Street Journal (12/20)

Mutual funds dispute additional registration regulation
The Investment Company Institute and the U.S. Chamber of Commerce have filed an appeal contesting the Commodity Futures Trading Commission's lower-court victory that requires funds trading in commodities to register with the CFTC in addition to the Securities and Exchange Commission. The Wall Street Journal (12/27)

Industry News

Valuation of nontraded REITs stabilized in 2012
After years of falling valuation, many nontraded real estate investment trusts that were launched before the financial crisis held on to fairly stable value in 2012. In December, such REITs largely saw a modest increase or decrease in valuation. InvestmentNews (free registration) (12/26)

REIT index returns nearly 20% for 2012
The Dow Jones Equity All REIT Index posted a total return of nearly 20% for 2012. That is more than double the 7.5% gains it registered in 2011. The Standard & Poor's 500 stock index gained 16% in 2012. The Wall Street Journal (1/1)

Income Planning

Number of alternative mutual funds soars
Mutual fund operators are attempting to mimic the success of hedge funds by offering alternative mutual fund options. The alternative funds, which can include strategies like shorting or investing in complex derivatives, have seen sharp growth in recent years. More than half of these alternative mutual funds have been founded since 2008, according to Morningstar. Financial Advisor online (12/26)

A formula for shielding fixed income from inflation
Inflation can signficantly reduce a retiree's purchasing power, retirement planner Henry Hebeler writes. A solution, he writes, is to multiply the after-tax value of one's annual fixed-income amount by one's age, then divide the result by 100. That's the amount it's safe to spend, and the rest should be invested. "[I]f you spend all of your after-tax pension or annuity each year, you are likely to lose over half of the purchasing power before you die," he writes. MarketWatch/The RetireMentors blog (12/27)

How to wean clients from their overweight cash positions
Clients who want to maintain an overweight position in cash but still generate single to mid-teen returns can be a challenge, writes Dan Richards, a faculty member in the MBA program at the University of Toronto. He offers four tips to gently move such clients off of some of their cash holdings -- be empathic, take baby steps, look at alternatives to stocks and show them star investor Warren Buffett's bearish take on the bond market. Advisor Perspectives (12/26)

Business Best Practices

Tech developments that advisers can expect this year
Clients increasingly will demand mobile applications in 2013, experts say. Integrating technology, outsourcing specialized work and increasing social media activity are among other top technology trends for advisers this year, Joyce Hanson writes. AdvisorOne (12/19)

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