European equities' sharp rise last year has left niche companies overlooked by the market, according to Thomas Brown, joint manager of the £181m Miton European Opportunities fund.
He said he is finding particular value in medical technology companies.
European equities performed well in 2017 - the IA Europe ex UK sector returned 17.1 per cent last year, with the Miton fund beating it with 28 per cent, putting it the absolute top performer as of 5 January 2018.
Mr Brown said there has been a notable shift in sentiment towards the asset class.
He said: "It has gone from European equities being looked at with revulsion, to the market being quite favourable to them. But that is actually an argument for active fund management.
"A lot of shares have gone up, a lot of the companies at the top of the index have done well, but you have to be willing to look further down the market cap scale."
He said the key to investing in medical technology companies is that many are "world leaders" at what they do, and have spent recent years investing in areas of the market often ignored by others.
Mr Brown said: "It is actually easier to understand, which of these quite small companies are going to be the winners than it is to know what will happen with the giants.
"There are big pharmaceutical companies that are a large part of the index in Europe. If you are an active manager and want to add value, you have to take a view on a drug that has a trial coming up, then the next trial, then whether it will come to market, and whether it will be successful.
"That could be six, seven years into the future, then you have to look at the price you are paying for the shares now, and judge that the market is wrong about how all of that drug progress, if it happens, will be reflected in the share prices in years to come.
"That is a lot to ask."
He is invested in Carl Zeiss, a company that is bringing to market "the next generation of laser eye products".
Mr Brown said the niche of laser eye is too small for many of the bigger pharma companies to have spent capital on.
He said the short-term time horizons of the largest companies in the sector means they haven't invested in niches such as this, and so have missed the opportunity.
The largest holding in the fund is Ferrari.
Mr Brown said it may be this is the only one of the top 10 holdings in the fund of which investors will have heard.
His co-manager Carlos Moreno said: "I look at some of our peers. There top 10 holdings are all the big companies, Novartis, which we don't think is a very good company, and Nestle, how can you have a different view to market on a share such as Nestle?
