Invesco Perpetual’s Jeff Taylor, who runs the £2.6bn Invesco Perpetual European Equity fund, is focused on oil, telecoms and banks, sectors he considers to me out of favour on the Continent.
He described his strategy as "valuation-focused" but "not strictly ‘value’ or ‘growth’".
"As such we’ll look at most any investment.
"We see striking valuation opportunities in out-of-favour sectors at the value end of the spectrum. In Europe, the prime examples are energy, telecoms and financials — especially banks."
There are also sectors which he wants to "keep well away from", he said, typically many of those which have attained ‘bond proxy’ status in recent years.
“To our minds, some have become eye-wateringly expensive as a result.
"Consumer staples such as food and beverage stocks are cases in point. These are often companies with extremely strong and respectable track records, and while it is easy to understand their market image, it’s important to remember that a good company does not necessarily make a good investment.”
However the fund manager said his decisions are not just valuation calls.
"There are good reasons to believe that the operating performance of European integrated oil companies, telecoms and banks will improve from here.
"To cite just three factors at play: Management attention to capital allocation and return on capital in energy is much improved, there are incipient signs of a return to long-absent growth in telecoms, and bank incomes are rising while costs are falling.”
Mr Taylor said a piece of investment advice he received years ago was to invest in the “empty room”, that is the asset where the fewest number of analysts are located turning breakout sessions at a conference. He said this helps him find the assets being ignored by the crowd.
Tim Stevenson, who runs the £253m Henderson Euro Trust, is also keen on banks. He said the sector is undervalued because many investors remain sceptical about the financial health of the sector as a whole, but he said there are many banks which are in robust financial health.
He is invested in ING and UBS.
Mr Stevenson added it is a myth that there are no technology companies in Europe that are world leaders.
He is invested in Amadeus, a company he said is a “world leader” in providing technology to hotels to manage their booking systems.
Chris Beauchamp, chief market strategist at IG Group said Eurozone equities have become a “crowded trade” as investor sentiment has shifted in favour of the asset class.
Luca Paolini, chief strategist at Pictet Asset Management said that in a general economic recovery, he expects European equities to outperform those of the US.
John Greenwood, chief economist at Invesco Perpetual said: "I think the long-term growth potential for Europe is somewhere between 1.5 per cent and 2 per cent growth. At the moment they're growing a little faster at about 2.2 per cent but that’s because they're catching up with where they should have been if they'd had better policies earlier on. I