The MSCI Europe index produced a return of 12.53 per cent for the 12 months to February 12 2014, compared with 10.02 per cent from Japan’s Topix index and 11.53 per cent from the FTSE All-Share index.

Only the return of 14.79 per cent from the S&P 500 eclipsed it in terms of major developed markets.

This seems to be something of a turnaround and is perhaps the cumulative result of continued measures from the European Central Bank and its chairman Mario Draghi to foster an accommodative monetary policy environment and the impact of austerity and regulatory measures across the region.

In terms of fund performance, on a general level those situated in the IMA Europe excluding UK outpaced those in the IMA Europe including UK sector, with returns of 16.14 per cent and 15.95 per cent respectively. This suggests that in spite of claims to the contrary, the UK may be the drag on European performance.

Within the Europe ex UK sector four of the five best performing funds for the 12 months to February 12 all had their highest sector weighting in financials at somewhere between 25-32 per cent of the portfolio.

Again, what was once an unloved sector has become more interesting to managers in recent months.

Stephanie Butcher, manager of the £197.61m Invesco Perpetual European Equity income fund, which topped the table for 12 months with a return of 30.47 per cent, points out in her latest commentary that “many analysts are underestimating earnings potential for some cyclical and financial sectors”.

She adds: “Consequently, areas of focus for the fund include the financial sector, where we believe dividend growth will also be an important theme in a number of cases.”

Another key area for many of the outperforming funds in this sector is pharmaceuticals, with Roche and Novartis featuring frequently among the top 10 holdings.

John Bennett, director of European equities at Henderson and manager of the Henderson European Focus fund and investment trust, notes: “For several years now we have ‘banged the drum’ for pharmaceuticals as one of the biggest mean reversion candidates in Europe and it remains an area of very strong conviction.

“For us, it was a deep-value play; we thought the worst-case scenarios were already priced in, as proved to be the case. Four years since we first introduced the theme into our portfolios, the industry has re-rated and company valuations are much closer to their longer-term average.

“The value trade has been done, but now the true growth renaissance of the industry is coming through, which we expect to last a few years.”

Meanwhile at the opposite end of the scale, the worst performer over the 12 month period, according to data from FE Analytics, was the Allianz Continental European fund with a return of 4.8 per cent compared with the sector average of 16.14 per cent.

This fund had its largest sector weighting to consumer goods at 28 per cent of the portfolio and 25.2 per cent in industrials, with just 2.3 per cent in financials.

In addition, exposure to the recovering peripheral areas such as Spain, which performed well in 2013, was also minimal at 6.6 per cent of the portfolio compared with its largest weighting of 24.1 per cent to France.

However, other poor performers included two Aberdeen funds, the Aberdeen European Equity and Aberdeen Global European Equity ex UK, which produced returns of 4.83 per cent and 6.73 per cent respectively.

Similar to the Allianz fund, these portfolios also had higher weightings to consumer goods and industrials, although favouring the industrials more with both portfolios placing more than 30 per cent in this sector.

Overall, the performance of the sector was positive with no funds producing a negative return in the 12 month period, but in a volatile and uncertain environment it seems those willing to take the seemingly more risky bet of financials and less defensive stocks may well have paid off.

Nyree Stewart is features editor at Investment Adviser