The strength of the European recovery is one of the most hotly debated investment issues at present. Some see Europe as one of the few value opportunities for equity investors, while others believe Japanese-style inflation and poor demographics could derail markets altogether.

Much of the wariness towards Europe is centred on the terrible time the region endured in both 2008 and 2011. The latter year was particularly painful on a relative basis, with funds in the IMA Europe ex UK sector unsurprisingly hit hardest by the eurozone summer sell-off.

However, some portfolios have a proven ability to perform well no matter what the market is doing, which is likely to be of particular interest to those still wary of the recovery taking place.

Jupiter European

This £2.5bn fund is managed by FE Alpha Manager Alexander Darwall (pictured) – one of the most highly respected European managers in the UK.

Darwall has a significant emphasis on quality, backing industry leading companies with a high barrier to entry. This style tends to work best in falling and flat markets, but the manager’s strong stockpicking has ensured that he’s also delivered the goods in more positive times.

According to FE data, Jupiter European has been a top quartile performer in its sector in five of the last six calendar years. Whilst it lost money in 2008 and 2011, it lost less than most, demonstrating its downside strength.

The only year it has failed to outperform its peer group and benchmark came in 2013, though it still managed over 24 per cent.

Unsurprisingly, the fund’s medium to long-term track record is very strong from a cumulative points of view, achieving top quartile returns over three years, and top decile returns over five and 10 years.

Performance of fund, sector and benchmark over 10yrs

Source: FE Analytics

Charles Younes, analyst at FE, says in spite of the fund’s strong performance in 2009 and 2010, investors shouldn’t be surprised to see it underperform in fast rising markets in the future.

“The manager does not take sector bets and really focuses on companies. Therefore the fund performance is only related to his stock picking,” he explained.

“Darwall does not really take valuations into consideration. He believes that fundamentals always come through and the successful can remain successful.

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“In the last six months of 2013 the explanation for the strength of European equities cannot be found in improving corporate profits for European companies.”

“Markets placed a greater confidence in a European recovery, particularly during the summer with improving business confidence indices driven by an additional interest cut by the European Central Bank.”

“Therefore his style prevented him from outperforming in this market environment.”

However, Younes says he and the team at FE remain highly convinced by Darwall’s stock picking skills.

“Despite the adverse environment post 2007, the manager maintained his investment style and was highly consistent in his investment approach. I have little doubt the fund performance will rebound from 2013. The Jupiter European fund is one of the most secure ways to invest in European equities.”

Baillie Gifford European

This £145m fund, which is co-managed by Tom Coutts, Paul Faulkner and Stephen Paice, has also demonstrated its ability in both rising and falling markets, achieving first or second quartile returns in every calendar year since 2008.

Over three years, it has outperformed its sector average, returning 33.38 per cent compared to 22.57 per cent from its sector, and a rise of 20.7 per cent in its benchmark.

Performance of fund vs sector and benchmark over 3yrs

Source: FE Analytics

Over six years it has returned 70.47 per cent compared to a sector average of 38.54 per cent – almost twice the return.

Alongside its outperformance compared its sector average over six years, it has consistently outperformed with a lower annualised volatility than its peers.

Baillie Gifford European is a favourite with Premier’s Simon Evan-Cook, who highlighted it as a future great in the fund management industry, pointing out it has a similar approach to Jupiter European.

“This fund [is all] about finding what the managers consider to be the best companies and holding on to them. They’re less concerned about valuation than others,” said Evan-Cook.

“They give a great deal of thought to their investment philosophy – namely, that the very best companies will compound over time. The fund has a very low turnover as a result.”