Rife with debt downgrades, street protests and sputtering economies, Europe has been a no-fly zone for most investors for more than a year. But some contrarians have been betting big on the Continent -- and quietly racking up impressive gains.

Despite the negative headlines pouring out the region, shares of European companies have been soaring. The Stoxx Europe 50, which tracks the Continent's blue chips, is up 9% this year through March 9 -- almost three percentage points better than the Dow Jones Industrial Average.

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Fund managers who bumped up their exposure to Europe and the U.K. in recent months are faring even better. The $2.1 billion Fidelity Overseas fund, which has nearly three-quarters of its portfolio in Europe, is up 14%, while the $8.5 billion Oakmark International has risen 16%. Those bets went against the tide: Investors have in the past six months yanked $6.9 billion out of international and global stock funds with heavy exposure to Europe, according to research firm Lipper. "The big mistake investors make is they think Europe is all one thing," says David Herro, co-manager of the Oakmark fund. "But Europe contains numerous subeconomies, some of which are doing well, some are not."

Experts say the gains are causing a classic dilemma for a host of financial advisers and brokers who have been shielding client portfolios from Europe, and are now wondering if it is too late to shift gears.

Indeed, Margaret Black-Scott, president and CEO of Beverly Hills Wealth Management, says some of the easy money has been made already. "We've taken some of the money off the table. We have to be more thoughtful now," she says.

Nevertheless, some pros still are scooping up European shares. Jim Moffett, lead manager of the $7.8 billion Scout International fund, said he is focused less on overall country exposure and is looking to buy "good companies in troubled places," such as Spanish apparel firm Inditex (ITX.MC) SA and Italian eyewear company Luxxotica Group.

At the $28 billion Thornburg International Value fund, co-manager Wendy Trevisani has been buying select financials that largely avoided euro-zone sovereign debt, such as U.K. bank Standard Chartered, which she says taps into growing demand from emerging markets in Asia like India and the Middle East.

Some truly brave managers are even betting that beaten-down stocks from the Piigs (Portugal, Ireland, Italy, Greece, and Spain) will outperform this year. Michael Gayed, the chief investment strategist at Pension Partners, says central banks around the world are pumping money into the markets to jump-start inflation -- and heavily indebted companies and countries tend to perform well during inflationary periods.

Euro-bears aren't so sure. The European Commission recently forecast the economy to contract this year, they point out, while the Continent's Central Bank remains firm on the need for severe austerity measures for the worst-hit countries -- both potentially bad omens for stocks. "Hopefully, it is past the worst point, but Europe is still facing a tough battle to return to sustainable growth in the face of still serious headwinds," says Howard Archer, chief European and U.K. economist of IHS Global Insight.

—Sarah Morgan contributed to this article.