Europe is the Cinderella continent, at least as far as investors have been concerned, and it is easy to see why. Bailouts, a troubled single currency, recession, unemployment and a good degree of political instability is too heady a brew for most private investors.
But almost imperceptibly the eurozone is staging a comeback after emerging from recession. Even Greece, the austerity-stricken ugly sister of the monetary zone, is moving towards a budget surplus for the year. And now the German election has been and gone, some argue the future for the eurozone is looking much brighter.
Buoyed by a more-positive economic backdrop, the FTSE Europe index has risen almost 20 per cent since the start of the year.
As Europe is home to a whole swathe of world-class companies that some argue continue to look cheap, is this now the right time to buy European stocks?
"Economies in Europe are recovering. Not necessarily rapidly but at a quick enough pace to allow for a turnaround in profits and sentiment towards European markets," says Hugh Sergeant, a fund manager at River and Mercantile.
"At a company level in Europe there has been aggressive cost-cutting, which means any improvement in demand will feed through to a significant increase in profits."
He believes Europe is just at the beginning of this cycle and forecasts profit growth of at least 30 per cent for the region's corporates, led by banks and other sectors sensitive to the economy.
His enthusiasm is echoed by a sample of 35 leading fund managers including Invesco Perpetual's renowned UK equity-income manager Neil Woodford and AXA Framlington veteran Nigel Thomas.
Asked by fund broker Chelsea Financial Services to select the developed stock market they expected to perform best over the next 12 months, 40 per cent selected Europe, trailed by the US with 29 per cent.
Nonetheless, headwinds threatening the eurozone's nascent recovery clearly remain. This week saw centre-right leader Silvio Berlusconi's attempt to destabilise the Italian government and meanwhile unemployment data in the eurozone showed it is stubbornly high at 12 per cent in August, up from 11.5 per cent a year earlier.
"I think it is going to be a slow burn. I think we will see a gradual improvement through to 2014 in European economies, but I would expect to see some holes in the road – particularly in relation to the Italian political situation," says Julian Chillingworth from Rathbone Unit Trust Management.
He expects the eurozone to survive, albeit with potentially different members in five to 10 years' time, but views the lack of a fiscal or banking union as a danger.
Mr Chillingworth also warns that growth in euroland is still reliant on Germany's export-driven economy. With this in mind, he finds it hard to get excited about the prospects for peripheral states, warning of "illusory value" in the share prices of domestically-focused southern Europe stocks.
He is more positive on big European stocks like French energy giant Total, with the potential to benefit from any improvement in underlying global economic growth, alongside improved sentiment towards commodities.
John Bennett, a European equity -fund manager at Henderson Global Investors, warns those interested in investing in Europe to familiarise themselves with the phrase "two steps forward, one step back".
Although markets have continued to rise steadily since the summer of 2012, after European Central Bank head Mario Draghi said he would do whatever it takes to ensure survival of the euro, Mr Bennett anticipates further volatility.
Nevertheless he is positive on pharmaceuticals, with Novartis, Roche and Sanofi his star picks.
He argues the sector is just two to three years into a decade-long growth cycle.
Europe is home to a number of consumer-facing globally recognised brands which can offer investors exposure to growth in Asia and other emerging markets experiencing a rise in domestic consumption. Consumer staple Nestlé and luxury retailer LVMH, the parent company behind Louis Vuitton and Christian Dior, sit in this camp. However, as both have posted double-digit share-price returns over the past three years (LVMH is up nearly 40 per cent), is it worth investing in cheaper but riskier domestically-oriented stocks?
Jonathan Ingram, who manages the JP Morgan Europe ex UK fund, takes this view. He says some of Europe's global dividend-paying companies now look expensive and sees better value in other parts of the market.
"We are very happy to buy companies with domestic exposure, like Bank of Ireland," he explains.
Bank of Ireland may have been rocked by the financial crisis, but he says things are now looking up for both the bank and the Irish economy. Yet this area of the market is prone to bouts of volatility and is not for the faint-hearted.
In the UK, as investors prepare for the Royal Mail privatisation, Mr Ingram says delivery companies could be another way to benefit from Europe's improving economic backdrop, particularly a rise in consumer spending. He cites courier company Deutsche Post and international delivery stock PostNL as top picks.
For those who prefer to gain exposure to the region through an actively managed fund, Robert Burdett of F&C Investments highlights the BlackRock European Dynamic Fund, and also recommends the stock-picking skills of Henderson European Special Situations, which tends to target undervalued mid-cap stocks.
If you expect further market rises in Europe and are willing to take on exposure to riskier areas, a lower-cost exchange-traded fund, a stock that trades on an exchange but tracks an index, or an index fund could be an alternative.
Oliver Tucker of Sarasin & Partners says the iShares MSCI Europe ex UK ETF is a way to get a broad exposure to the market that some active managers have typically avoided. Mr Burdett selects the BlackRock BCIF Continental European Equity Tracker.
But whatever way you look to invest in Europe be prepared... the worst may be over but there will be major bumps in the road.
Danielle Levy is a reporter at citywire.co.ukReuse content