Get strong growth in Europe

Shares in world-class European companies remain depressed but the market for European products is global and a weaker euro makes exports more competitive. Emerging markets such as China continue to show strong demand for European luxury products, which often have high margins, and businesses with the right strategy can be extremely profitable. It's a similar story for many of Europe's industrial companies.

"Shunning these companies because of where they are based could be a mistake," says Mark Dampier, head of research at broker Hargreaves Lansdown. "What matters in the long run is a company's growth potential, not bailouts or political bust-ups."

However, picking the right companies is essential, so you should invest with someone who can do this. And, judging by his past record, Alex Darwall, manager of Jupiter European Opportunities Trust, seems able to. Despite problems in Europe, this investment trust has made positive share price and net asset value (NAV) returns over one, three and five years. It is ahead of all the other trusts in the Europe sector and the FTSE Europe ex-UK index over these periods, as well as the FTSE All-Share.

"We see scope for continuing outperformance over time," says Tom Tuite Dalton, analyst at Oriel Securities. "We remain positive, even at a time when Europe is proving to be something of a dirty word. If looking to pick one listed European fund, Jupiter European Opportunities would be our fund of choice."

At just over 7 per cent, the trust is on a tighter discount than most of its sector peers and its own 12 month average, but is still worth buying because of its strong performance.

Mr Darwall picks companies according to their attributes rather than the country where they are listed. He seeks companies with low capital expenditure, international sales in more than one market, strong profit margins and a structural long-term trend in their favour. The companies don't just give exposure to Europe - emerging markets account for around a quarter of the portfolio holdings' sales, and the US another third.

The trust has low exposure to southern Europe, although Mr Darwall says that he is not because he is consiciously avoiding this area - rather, it's because he cannot find what he wants there. The larger companies in peripheral economies tend to be utilities and banks, sectors that he isn't interested in.

Read more on how Mr Darwall constructs the portfolio

The trust has a concentrated portfolio of only around 38 shares, which in theory increases risk and the potential for volatility. But Mr Darwall says the portfolio is diversified by sector and geography (although two-fifths of the holdings are UK based), and concentration means it is subject to company-specific rather than systemic risk. More relevant for many investors is that Mr Darwall puts his money where his mouth is - he owns around 5 per cent of the shares.

Perhaps the biggest downside is that the trust levies a performance fee of 15 per cent of the amount by which the NAV exceeds the FTSE World Europe ex-UK Index total return index. However, this is capped at 7.5 per cent in total, and the trust's ongoing charge is 1.07 per cent - very reasonable for strong out performance and much lower than many open-ended funds. The small number of holdings also makes for a low portfolio turnover rate, which means trading costs cut less into returns. If you want to invest in quality European companies at reasonable valuations without the hassles of witholding tax and processing euro-denominated dividends, then Jupiter European Opportunities Trust is a buy.

Read more on finding value in Europe

Read John Baron's commentary

Source: Morningstar, *Oriel Securities.

Performance data as at 9 July 2012

Top 10 holdings as at 31 May 2012

Geographic breakdown