The strength of European corporates coupled with the carnage wreaked on share prices by snowballing negative sentiment has left many stocks in an attractive position according to James, who heads the five crown-rated Standard Life Investments European Equity Income fund.
"Investors need to look behind the headlines when it comes to Europe," he said.
"Over a three-year perspective, I think Europe will be a very good place to be. There is a huge diversity of opportunity ranging across 25 countries."
He added: "If you take a stock-specific approach, we are confident about the future. Investors need to see that there are good companies with strong balance sheets and that have the ability to pay sustainable dividends."
James accepts that volatility will remain over the coming months and the low growth environment in Europe will continue during 2013, despite the ECB’s OMT policy.
"Over the next year, I don’t think that there will be a big change to what we are seeing at the moment," he said.
"Policy makers are alive to the problems at hand. What we have seen with Draghi’s bond-buying scheme is that tail risks have been diminished and that has led to a degree of market recovery."
"However, there is austerity in certain markets and growth is still lacklustre. I think one thing that is for certain is that volatility will continue."
James thinks finding income is a crucial strategy for investors who want to see performance.
He added: "Very simply, finding income is the most important form of asset allocation. So if that means you have to be underweight in Germany, which we are at the moment, then that is what you have to do."
"When it comes to the stocks we invest in, we see opportunity from an income perspective."
FE Alpha Manager Will James has headed up Standard Life Investments European Equity Income since launch in 2009.
According to FE Analytics, the fund has achieved top-quartile performance over one and three years.
Since launch, it has made 47.74 per cent while the IMA Europe ex UK sector has returned 38.81 per cent. It has also outperformed the FTSE World Europe Ex UK index, which returned 38.66 per cent over the same period.
Performance of fund vs sector and index since April 2009
Source: FE Analytics
Over a three-year period, the fund has been less volatile than the sector and the index.
James has consistently outperformed his peers since beginning his career in fund management, returning 138.97 per cent compared with 106.01 per cent from his peer group composite.
Standard Life Investments European Equity Income yields 4.71 per cent and has a total expense ratio (TER) of 1.61 per cent.