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The ratings agency's annual review of the Europe sector found in the first three months of the year there was a shift among fund managers in this sector from a consensus negative view to an active fear of missing the bear market rally.

Deborah Boys, lead analyst of S&P Fund Services, said: "This market rally is now under way, although much of it appears to be driven by short covering. Funds at review were generally still defensively positioned, but markets are moving fast."

S&P Fund Services was reviewing the 12-month period from 1 February 2008 to 1 February 2009.

Out of the 153 European equities funds reviewed, a total of 14 were upgraded while 13 had their ratings reduced.

Of the 14 funds upgraded, three were promoted to become AAA.

These included GAM Star Continental European Equity fund, GAM Star European Equity fund and Threadneedle IF European Smaller Companies fund.

Last year, managers with a top-down approach did well, such as Cazenove's Chris Rice and Steve Cordell, as well as William Davies at Threadneedle.

According to Ms Boys for these managers, it was a matter of timing a move out of materials and into healthcare, which rallied at the end of the review period.

Managers who emphasised established, long-term quality growth also did well.