GREECE and Portugal are struggling to stay afloat, doubts hang over the future of the euro, and Europe's leader of the International Monetary Fund (IMF) bailouts has quit over sex charges in New York.

Investing your money in Europe right now might not sound like such a great idea. Not so, say investment managers who argue that this could be just the right time to start buying European shares.

Alister Hibbert, manager of the BlackRock European Dynamic fund, one of the top performing funds in the sector over the past three years, says investors are being distracted by the problems in southern Europe while northern Europe is thriving.

He says “Companies in this region have been particularly strong over the past six months, although many investors are ignoring investment prospects in the region due to worries about the periphery markets.”

This under-investment in Europe means share prices are relatively cheap. These valuations have made European equities attractive compared to other stock markets and managers are finding plenty of opportunities to buy shares in well-managed companies with good growth prospects.

Recently, UK investors have started buying more European funds. Latest sales figures from the Investment Management Association show that there was more new investment in European funds in March from private investors than went into funds investing in the Asia Pacific area or China.

Luke Stellini, European equity product director at Invesco Perpetual, said while there was no doubt that the huge amount of debt in Europe meant it could not compete with the higher growth rates of the more nimble emerging economy, he felt recent economic data showed Europe’s recovery was sustainable.

Fund managers also stress that when you invest in a European fund you are not investing in the European economy, any more than you would be investing in the UK economy when you buy a UK fund. You are investing in the companies based there, and there are plenty of world class businesses in Europe.

Among advisers about to increase their stake in Europe is David Thomson, chief investment officer at VWM Wealth Management in Glasgow. He explains: “We always maintain some exposure in our client portfolios to Europe.

“We did reduce it last year when the Greek crisis first started and we adopted quite a defensive position but we feel the worst is now over and the bad news is in the price.”

It may take time before the economies of southern Europe recover. However, as BlackRock points out, northern Europe is home to some of the healthiest economies in the developed world and to some of the most competitive brands and companies.

One of the funds which David Thomson likes is Jupiter European, another strong performer. This fund is managed by Alex Darwall, who believes it is a good time to invest in Europe because there is an ideal mixture of economic factors in place combined with “an exciting level of change”.

However, he admits he is not too concerned about economic growth because “if you find good companies, they will find the growth for you”. Among his top holdings are Novo Nordisk, a Danish pharmaceutical company, DnBNor, a Norwegian bank, and Vopak, a Dutch provider of tank terminals for oil and gas products.

Where some leading European companies have particularly gained in recent years is from their trade with the emerging economies.

The weaker euro had been helping export-oriented companies in Germany, for example, to benefit from strong overseas demand, including from the emerging countries.

Elsewhere Swatch, the Swiss watchmaker, now derives around 30% of its revenue from China, while Finnish tyre firm Nokian Renkaat, the world leader in winter tyres, has done well from its sales to Russia.

Investors cannot only find European funds which offer capital growth nowadays but also those which focus on generating an income from European shares such as Standard Life European Equity Income, which holds shares in firms that are solid dividend payers – such as Sanofi-Aventis and Telefonica. The fund now has a 3.7% yield.

The strength of European firms is one reason IFA firm Thomson Shepherd ensures its investors always maintain some exposure to the region.

However, director Barry O’Neill says: “We don’t try to time stock markets, we maintain a consistent exposure based on market capitalisations. In other words, as Germany and France each represent 3% of the world’s stock markets, that is how much of our equity portfolio we have invested there.

“The periphery countries such as Spain are 1% or less, so they don’t have a big impact.

“But we are relaxed about what is happening in the European bond markets because we see it as a temporary problem and we are long-term investors.”