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Dear Nancy Woods,

I have been advised to invest in a closed-end fund.  My adviser suggests that I do this quickly because the fund is below its net asset value (NAV).  Why the urgency? Signed, Larry

Dear Larry,

First you need to understand what the net asset value is.  It is the total value of assets less liabilities, divided by the number of outstanding units.  If that value is greater than where the fund is trading, it could be considered a good deal depending on the underlying holdings.  The urgency could be that the units will rise to equal or above the NAV and you miss the "on sale" opportunity.  You should see if the units typically trade below the NAV, and if that is the case, there is no rush.

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Nancy Woods, CIM, FCSI, is an associate portfolio manager and investment adviser with RBC Dominion Securities Inc. To ask her a question, send an e-mail to asknancy@rbc.com or visit her web site at nancywoods.com

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