Funds that invest in European stocks, particularly small caps, have racked up impressive gains in recent years.

For the one-year period through August 31, the average European equity portfolio leapt 21.3%, almost doubling the 11.2% return of the S&P 500 Index. Over five years, the average European fund edged up 1.5%, versus a loss of 2.1% for the index.

The top performer in the sector over the past 12 months was the $85 million AIM European Small Company Fund (ESMAX), which soared 43.3%. Lead managers Jason Holzer and Borge Endresen seek small- and micro-cap companies that have delivered double-digit annual growth and can sustain such robust gains.

The portfolio is broadly diversified: It holds 105 stocks, while the top 10 holdings only account for 17% of total assets. While the fund focuses on Western European investments–almost half its assets are parked in the U.K. and France–five other countries have significant allocations.

The $128 million Ivy European Oppor-tunities Fund (IEOAX) takes the top spot among Europe funds for the five-year period with a handsome 15.8% annualized return, a tenfold improvement over the peer group average. The fact that the fund also shows up among the five best performers for the one- and three-year periods illustrates its strong consistent performance.

London-based manager Stephen Peak can invest across the market-cap spectrum, and does so opportunistically (hence the fund’s name). He emphasizes stocks that are trading at reasonable prices and have a catalyst for reasonable near-term gains. The fund has a heavy exposure to Britain (43.8%), although its top sectors are spread pretty evenly among industrials, financials, and consumer discretionaries and staples.

Top holdings include the British oil and gas producer Regal Petroleum; the German engineering firm Pfleiderer; French broadband Internet services company Iliad; and NDS Group, a U.K.-based provider of digital technology services.