The sector has been out of favour among the vast majority of fund managers since the financial crisis. However Wilkinson’s exposure to this and other cyclicals has stood him in good stead in the rising markets of the past 12 months.
"Financials have continued to lead the market in Q4, which was a surprise because I thought they would come back a bit after rallying in Q3," he said.
"The majority of my positive surprises have come in financials."
However, the manager says he feels the sector has come to the end of a brief bull run and the "extreme undervaluation is over".
Outside of financials, Wilkinson says he has significantly increased the fund’s exposure to mid cap stocks, which he says offer better growth opportunities than their larger, more defensive counterparts.
He adds he has been particularly surprised at how poorly more traditionally cautious sectors, such as telecommunications and utilities companies, have done and says many perceived defensives are not only too expensive, but not as safe as investors think.
"You’re paying a high premium for the perceived safety, but they aren’t as safe as you would think," he said.
"Businesses that are not in defensive sectors, while they may be more cyclical, if they have good order books you can find growth."
"You won’t be paying a high multiple for those companies because they are perceived to be more cyclical."
Wilkinson took over the three crown-rated fund at the start of last year. Since then, it has returned 7.03 per cent, marginally underperforming the FTSE Europe index, which returned 7.98 per cent over the period.
The IMA Europe ex UK sector has returned 10.54 per cent since the start of the year.
Performance of fund vs sector and benchmark in 2012

Source: FE Analytics
Wilkinson admits he made the wrong call by not moving a significant portion of the fund into more defensive stocks when he took over, but says continuing to hold cyclical stocks has begun to pay off.
"I didn’t get defensive enough and I should have," he commented. "But I stuck to my guns and when the market did finally come around, I had a good Q3. But it needs more than a few more weeks of good performance to make it back."
The fund is second-quartile over the longer-term, having returned 118.1 per cent over 10 years, compared with a sector average of 114.78 per cent.
The fund has a minimum investment of £1,000 and an annual management charge (AMC) of 1.25 per cent. Its total expense ratio (TER) is 1.3 per cent.