Although emerging market equity is a compelling investment theme, it has not been fully appreciated by investors, says Janus Henderson. “We think the size and growth rates of these regions alone should merit investors’ attention,” says Matthew Culley, Portfolio Manager at Janus Henderson.

The investment manager says that outsourcing and convergence are the two key reasons for emerging market equity exposure. However, there is a rapidly changing scenario present in these countries.

Janus Henderson talks about the shift in consumption in emerging markets, citing certain demographics that are beneficial for innovation. One parameter is the extent of internet users in Asia and other regions.

“Emerging countries are educating students in science, technology, engineering, and mathematics at a faster pace than any other region,” said Janus Henderson analysts. China and India have the largest proportion of students enrolled in STEM (science, technology, engineering and mathematics) curricula.

The investment management firm in a recent insight gives examples of how technology is increasing the competitiveness of small- and medium-sized businesses, the goal being broadening access and enabling participation by the emerging market population.

Additionally, emerging markets have imported business practices from developed markets and applied technology solutions to tackle local challenges.

Apart from education, healthcare is another sector which is seeing innovations on a large scale. “With the lack of sufficient access to healthcare infrastructure across many countries, we are increasingly seeing unique business models emerging to utilize technology to address these gaps,” as per Janus Henderson.

Lastly, the investment management firm sees emerging market innovators to impact global equities investing.