While many commentators say the current rally is sentiment-driven and will not last, few have put their head above the parapet to suggest the exact cause for any pull-back. Coombs says that the autumn election could be the forgotten catalyst that could see the eurozone debt crisis rear its head again.
"It’s all about confidence and belief, and I think it’s quite likely that you could get some German politician making blood-curdling pronouncements about the euro and paying for southern Europe, and that could spook the markets," Coombs said.
Coombs, head of multi-manager at Rathbones, thinks that investors should not fall into the trap of thinking that the eurozone crisis is over, and events over the past week have suggested he may be right.
A new party has been launched by a number of professors of law and economics to oppose German membership of the euro, suggesting the country may yet land the decisive blow in the crisis.
However, Coombs does not think such fears are reason enough to avoid investing in the continent.
He has a 16 per cent weighting to Europe in his Rathbone Multi Asset Enhanced Growth portfolio and 12 per cent in Rathbone Multi Asset Strategic Growth.
One of the funds he uses to gain access to the region is Baring German Growth, run by FE Alpha Manager Rob Smith.
Baring German Growth sits in the IMA Specialist sector but has beaten the vast majority of IMA Europe ex UK funds over three and five years, and has made substantial gains over its index, the German DAX.
Data from FE Analytics shows that the fund has made 53.36 per cent over the past half a decade, compared with 37.73 per cent from the German market.
Performance of fund vs index over 5yrs
Source: FE Analytics
Smith believes that any anti-euro sentiment will be contained by the German political process.
"It could end up being like in the UK where you see protest votes inbetween elections but then the main parties win the votes at the elections," he said.
"I think they realise that if they do not hold the euro thing together, it’s going to be pretty devastating for the financial system in Germany."
He adds that any troubles for the eurozone short of a break-up are likely to benefit the German economy.
"Weakness in Europe isn’t the same as weakness in the euro, which has increased profitability for German corporates," he said.
"That explains why I am still positive on German corporates. Simply because when things get tricky, the exchange rate goes in their favour."
"As long as demand remains strong in Asia and the US, a weak euro can easily be mitigated."
"I think it all depends on how the rest of the world reacts to the eurozone crisis. Last time the Americans and the Chinese also wobbled and that hit global demand."
"In any future eurozone crisis, if the rest of the world shrugs it off then that will mean that the earnings on German corporates will be pretty resilient."
One of the few areas of weakness in the German economy is in the car industry, Smith says.
"Even in Germany, car sales are falling quite dramatically. It isn’t just in Italy and France. In January car sales were down 8 per cent, February 10 per cent year-on-year."
"However, it could just be a pull-back from an exceptionally strong last couple of years. Most people don’t change their car every year."
"I am not overly positive on the domestic economy as a whole. It’s just more positive relative to everyone else."
"But Germany is still creating jobs and you won’t see the collapse in domestic demand you have seen in the periphery."
Smith explains that he is tilted towards the small and mid cap areas of the market, which he thinks are due to experience earnings upgrades.
Some critics of single-country funds argue that a regional portfolio offers more diversification and therefore less risk.
However, Smith says that the wide range of companies he holds – 70 in all – and the wide range of sectors and market-cap sizes they represent provide diversification, while their export-driven nature means their earning sources are diversified.
He also claims that it is safer to invest in Germany than Europe as a whole.
"This year, many investors have moved into regional European funds but had their fingers burnt when the Italian market went down."
"This is the danger when you go away from the core of the investment. So to my mind you are taking on more risk for less reward."