Analysts divided, but Euromania persists

Investment trust analysts at Investec report further evidence of this saying: "Stock-pickers in the region have begun to outperform their benchmarks, as correlations seen in times of greater market turbulence are breaking down. Increasingly the skills of an active manager will be useful as the decrease in correlations will hopefully allow managers to avoid the worst performing companies. Interestingly, since the beginning of the year, out of the four European funds we look at below, each one has beaten their respective index. Europe seems to be becoming increasingly interesting for those investors willing to take on a little extra risk and take advantage of a turn in sentiment."

However, not everyone is convinced on the merits of Europe, including Paul Taylor, chief executive officer of independent financial adviser McCarthy Taylor. "Since the 2008 crisis we ask: have the European banks solved all their debt problems? Have they now agreed a single economic policy for the eurozone? Can Germany really bankroll all of Europe? Have we seen a reduction in unemployment? Has debt suddenly come down in Greece, Italy, France, Spain and Portugal? The answer to all these questions is surely no. Europe is still faced with massive problems and it is going to get much worse before it gets better. We feel these markets do not justify exposing our clients to the risk involved. We can achieve good returns in the UK without the currency risk (around 12 per cent in the last year to date). The euro may prove to be overpriced, if the real interest rates rise and borrowing becomes costly."

Source: Investec, Morningstar as at 28 August 2013