Mitchell describes outsiders' view of the eurozone as "slightly surreal", especially with regard to the panic around the peripheral countries.
"They are similar to distressed states and municipalities in the US," he said. "They don’t have a dangerous effect on the whole."
The key difference between the US and Europe is that the world’s largest economy operates as a single entity, with one government and a single fiscal union.
However Mitchell, who was previously head of specialist equities at JO Hambro, says that the leap to greater fiscal co-operation within Europe could soon become reality.
"There are ground breaking things happening in Europe at the moment," he said. "It’s not as big a gap to jump as you think."
The manager adds that the European Central Bank and member countries have gone to great lengths to keep the single currency area intact, which he says should give investors greater confidence in the future of the region.
"Look at the hell Greece, Portugal and Ireland have gone through to stay part of this," he said.
After several years of macro events knocking the market about, investors in Europe have seen a strong rally in 2013, and Mitchell expects this to continue unabated.
"It’s very unlikely there will be any surprises in 2014. Europe will be one of the least dangerous places over the next six months," he argued.
Performance of indices over 1yr
Source: FE Analytics
JOHCM’s Paul Wild supports Mitchell’s view. The manager of the JOHCM Continental European fund recently told FE Trustnet that he expects the European rally to continue into next year.
A number of multi-managers have also bought into the region for income, citing a growing dividend culture and greater diversification than in the UK.
In spite of his bullishness, Mitchell says he remains pragmatic about the prospects for Europe, and will adjust his view should the situation in the region change.
However, he thinks it will be some time before headwinds knock the market about again.
"We think there’s another one to two years of this European bull market," he said.
"It’s been a rocky road and people have told us we’re idiots, but [Europe] is gradually working out the way we hoped. Things are looking good."
Mitchell adds that the positive story in the region comes from within Europe itself, rather than demand from the beleaguered emerging markets.
"It’s all about domestic Europe," he said. "The big, international companies are all a bit too expensive. They’ve been the haven of flight to safety and we think they will be facing headwinds with the slowdown in emerging markets, particularly China."
Instead, the team is focusing on opportunities in areas that have been out of favour, such as banks and selected stocks in peripheral countries.
Nearly a quarter of the fund, 21 per cent, is invested in the periphery.
Mitchell is also backing banks in a big way, with 23 per cent of his fund invested in the sector. BNP Paribas is one of the fund’s top-10 holdings.
"These companies have a really good chance of making returns on capital similar to what they did before the financial crisis," he said.
"The market has gone on trading as if they’ll never make returns on capital again. That’s just not realistic."
However, Mitchell says he is steering clear of the investment banks, because their future is far less certain.
"You have to be careful with investment banks. Trying to forecast a return to normalcy for UBS or Deutsche is difficult to do," he said.
The SW Mitchell European fund has lagged the FTSE Europe index over the medium-term, underperforming over three and five years.
Over the shorter term the fund has inched ahead of the market, returning 22.61 per cent over the last 12 months while the index has gained 20.01 per cent.
The fund holds some companies in the UK, with Lloyds Banking Group featuring in its top-10.
Mitchell is also invested in companies such as Spain's Amadeus IT, a transaction processor for the global travel and tourism industry, UK-based online supermarket Ocado and France Telecom.
SW Mitchell European requires a minimum investment of £10,000.
