But the World Happiness Report may help put a smile back on our faces as it reveals the countries where everything appears more cheerful and positive.

The report ranks nations on factors such as GDP per capita, social support, healthy life expectancy, freedom to make choices, generosity, and perception of corruption.

For the sixth year in a row, Finland was named the world’s happiest country, followed by Denmark, Iceland, Israel, Netherlands, Sweden, Norway, Switzerland, Luxembourg, and New Zealand.

Perhaps unsurprisingly, war-torn Afghanistan and Lebanon emerged as the two unhappiest in the survey, which was released to mark the UN’s International Day of Happiness.

Is happiness a good investment?

A happy environment can be good for investors. On a superficial level, at least, it means people may feel more content, wealthier and willing to spend their money. This obviously translates into bigger profits for companies, rising stock prices and the possibility of dividend pay-outs for shareholders.

This optimism is further boosted when the population feels they have the freedom to make their own decisions and are under a government that doesn’t appear corrupt. Basically, the whole backdrop of such countries will be supportive of businesses’ efforts to turn a profit and produce goods and services that everyone wants to buy.

Opportunities in Europe

One conclusion we can draw from the study is that people living in many European destinations, particularly the Nordic countries, seem a lot happier.

With that in mind, I thought it’d be a nice idea to take a closer look at investment funds that focus on these areas and the different companies they favour.

My first contender is the BlackRock European Dynamic fund. Its manager, Giles Rothbarth looks for companies that are either undervalued or with good growth potential. I like the fund’s flexible approach and the team’s willingness to refine its process. As a result, it’s become one of the standout portfolios in an increasingly competitive sector. Currently, its largest stock holding is in Novo Nordisk, the Danish pharmaceutical company whose focus is on defeating diabetes.

Considering the economy

Another favoured fund is Janus Henderson European Focus run by John Bennett, who is one of the most experienced managers in this area. He will consider the macroeconomic environment, as well as sector trends and stock-specific stories, when he’s putting the portfolio together. This approach can highlight interesting opportunities. For example, one of its largest positions is in UPM-Kymmene, a Finnish forest industry company that makes products made of responsibly sourced, renewable raw materials.

Another fund I like is GAM Star Continental European Equity. Manager Niall Gallagher takes a high conviction approach to investing, which results in a concentrated portfolio of 30-40 companies. Many of these businesses are household names, including Nestlé, the Swiss food and drinks giant, and LVMH Moët Hennessy Louis Vuitton, the snappily named French luxury goods specialist.

Is smaller beautiful?

There are also plenty of interesting investment opportunities among smaller businesses and one fund we like in this area is the Barings Europe Select Trust. The four-strong management team invest in small and medium-sized companies that have been identified through their GARP process, which stands for growth at a reasonable price. This area is under researched and that provides plenty of scope for good stock pickers to find attractive opportunities across countries and sectors.

Finally, there’s T. Rowe Price European Smaller Companies Equity. Ben Griffiths, the manager, has been around a long time and boasts a proven track record of success.

He focuses on high quality, durable franchises with good capital allocation and high standards of corporate governance, which are all attractive features of decent smaller companies.

The fund also has plenty of diversification, with the 10 largest companies including Austrian bank Bawag, UK media group Ascential, Spanish IT firm Amadeus, and Amplifon, the Italian health care provider.

Darius McDermott is managing director of FundCalibre & Chelsea Financial Services