Rachel Benepe, manager of the

First Eagle Gold Fund

(SGGDX) - Get Report

, says gold is the best protection against unforeseen events, the threat of rising inflation and other commodities such as oil and property.

The fund, which gets Morningstar's highest rating of five stars, has fallen 9.7% in the past year, less than 94% of its peers. Over three years, the First Eagle Gold Fund has risen an annual average of 5.3%, compared with 2.6% for rivals.

Welcome to

TheStreet.com's Fund Manager Five Spot

, where America's top mutual fund managers give their best stock picks in five fast and furious questions.

Are you a bull or a bear?


At First Eagle Funds, we are always concerned about the downside, which is one of the reasons why we have always viewed gold as insurance. Gold is our downside protection against those events we cannot forecast.

What is your top stock pick?


Since First Eagle views gold as a form of insurance, our preference is to own bullion because it is free and clear of those risks associated with mining. Our safest investment is our physical gold bullion. However, physical gold is not always the cheapest way for us to get insurance exposure. We therefore evaluate owning the bullion versus gold-mining stocks. We tend to prefer gold-mining stocks that are already producing because we view gold-mining shares as

an option on ounces in the ground

, so having proven reserves is important. This is one of the reasons why we have less exposure to the junior mining space than other gold funds. We also tend to like those producers that are unhedged.

Randgold Resources

(GOLD) - Get Report

is our largest holding in the First Eagle Gold Fund. This is a company that has demonstrated an ability to find, build and operate mines in West Africa. In most cases, gold-mining companies tend to be good at only one of these activities. Randgold is one of the rare few that is adept at all three stages, which has been a key differentiator for the company and the stock.

What is your top "beneath the radar," or sleeper, stock pick?


South African gold miners aren't exactly under the radar in the gold space, but we think they are currently underappreciated. Investors may be worried about the political situation or the labor situation in South Africa, but these companies, particularly

Gold Fields

(GFI) - Get Report



(AU) - Get Report

have been increasing their exposure outside of South Africa. Additionally, South African mines, while deep and labor intensive, have long reserve lives, and in an industry where mine supply has been declining, we think 30- to 40-year mine lives is an attractive feature.

What is your favorite sector?


In terms of a portfolio hedge, we think gold has a number of advantages over the alternatives. First Eagle, therefore, runs a pretty "pure" gold fund with minimal exposure to other metals such as silver and platinum. At the end of the day, First Eagle sees gold as the best inflation hedge versus oil, other metals and real property, and we also like that it is a hedge against other potential events.

What sector or stock would you avoid?


First Eagle tends to avoid those gold companies that are really base-metals companies with some exposure to gold. We tend to underweight those companies that depend on zinc, lead or copper to boost their earnings. This is, again, core to our philosophy that gold is the ultimate insurance. We couldn't expect a base metal to perform outside the business cycle or credit cycle in the same way that gold does, so we have to be careful that we don't buy those base-metals companies that are masking themselves as a gold company.

Before joining TheStreet.com, Gregg Greenberg was a writer and segment producer for CNBC's Closing Bell. He previously worked at FleetBoston and Lehman Brothers in their Private Client Services divisions, covering high net-worth individuals and midsize hedge funds. Greenberg attended New York University's School of Business and Economic Reporting. He also has an M.B.A. from Cornell University's Johnson School of Business, and a B.A. in history from Amherst College.