NEW YORK (

TheStreet

) -- Stephen O'Neill, co-manager of the

RiverNorth Core Opportunity Fund

(RNCOX) - Get Report

, says investors would do better to pick the right closed-end fund manager rather than a specific fund because bargains are few and far between.

The large-cap blend fund, which invests mainly in closed-end mutual funds, has risen 41% this year, better than 99% of its Morningstar peers. Over the past year, the North Core Opportunity fund is up 17%, again exceeding 99% of its rivals.

Welcome to TheStreet.com's Fund Manager Five Spot, where America's top mutual fund managers give their best stock picks in five questions.

Are you bullish or bearish?

O'Neill:

The tremendous comeback in financial assets has left few opportunities for bargain-seeking investors. Most risky asset classes are trading near their average valuations. That being said, RiverNorth Capital remains bullish on many deep-discount closed-end funds because they provide a sizeable margin of safety for taking market risk at these levels.

What is your top fund pick?

O'Neill:

The

SunAmerica Focused Alpha Growth Fund

( FGF) is a well-managed closed-end equity fund trading near a 15% discount to net asset value. The $290 million fund is co-managed by Tom Marsico and Ron Baron. The net asset value of this highly concentrated equity fund is up approximately 27% year-to-date. More importantly, nearly 20% of the fund is owned by institutional investors that have a history of proposing and/or supporting corporate actions that permit shareholders to redeem their shares at net asset value. With the fund trading around 85 cents on the dollar, we believe that one of these institutional investors may take an activist lead and pressure the fund's board of directors to take action.

What is your favorite "sleeper" choice?

O'Neill:

RiverNorth Capital likes the

Royce Value Trust

(RVT) - Get Report

. The venerable closed-end equity fund has been managed by Chuck Royce for over 20 years. RVT has become a favorite of ours because the discount is historically wide -- near 15% -- and the manager is currently waiving the fund's management fee. Although we do not foresee any immediate catalysts for discount-narrowing, we are happy to own an actively managed fund with an expense ratio of less than 0.2%. Unbeknownst to many current shareholders, Royce waives the management fee on RVT if the fund's rolling 36-month total return on net assets is negative. Although the fund's net asset value is up nearly 38% year-to-date, the fund's rolling 36-month total return on net assets is down about 16%. Therefore, the manager will not charge the fund a management fee until either recent losses are recouped or poor performance in the fourth quarter of 2008 is rolled off in approximately two years.

What is your favorite investment category?

O'Neill:

As shown by RiverNorth Capital's favorite picks, we believe that U.S.-focused closed-end equity funds are particularly attractive. Today's historically wide discounts of 15% or higher reflect investors' reluctance to take market beta risk in the wake of two 50% bear markets in the S&P 500 over the past 10 years. Whereas discounts are rapidly narrowing in popular closed-end fund sectors such as fixed-income, commodity and emerging markets equity funds, classic U.S.-focused equity funds continue to sport deep discounts. We believe this anomaly may correct itself if the stock market continues to surprise investors to the upside.

Which sector would you avoid?

O'Neill:

Share prices on many closed-end high-yield bond funds have become speculative. The aggregate market cap of this closed-end fund sector is up an incredible 90% since the March low. The massive comeback in the high-yield bond asset class has been accompanied by dramatic discount-narrowing in the closed-end fund sector. The market-cap weighted average discount for the sector has narrowed from negative 16% on March 9 to positive 5% today. We believe the easy money has already been made in high-yield bonds, and investors should not pay premiums for the closed-end funds in this sector.

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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.