Investing in technology for global growth

Equity markets have a pivotal role to play in driving global economic progress. The driving purpose of an equity market is to match capital to the best long-term ideas. This allows investors to participate in the financial success and growth of individual companies and the economy as a whole.

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

History suggests that financial markets have ultimately been successful in this role, fostering innovation and helping to drive productive long-term economic growth¹. With this growth has come many other benefits, such as the creation of new jobs, opportunities for social mobility and long-term wealth generation.²

Schumpeter’s gale

Positive progress does not always feel entirely comfortable, however. It involves what the 20^th century Austrian-American economist, Joseph Schumpeter, called “creative destruction”³, the process by which innovation and technological advancements lead to the replacement of old industries over time. This is an important part of capitalism and the efficient allocation of capital but, by its nature, the process always involves winners and losers. Consequently, it takes a shrewd investor to focus on the former, while avoiding the latter.

With “Schumpeter’s gale” blowing continuously through financial markets, it can sometimes feel as though the economy must take a step back in order to make multiple steps forward. This is reflected in the cyclical nature of the economy and the volatility seen in stock markets in the short term. Because of it, investors should always take a long-term view. The force of Schumpeter’s gale is ultimately felt in an economy’s long-term progress. It is the process of creative destruction that creates the long-term opportunities that growth investment funds look to capture.

How investing in technology delivers long term growth opportunities

We are living in an age in which many things that were once deemed unthinkable now seem possible. From space exploration to robotics, this is an age in which science fiction can appear to blur with reality. The phrase creative destruction assumes something old that is ready to be disrupted. But in the modern economy, we are seeing genuine technological innovation, with the birth of radical new technologies and industries. It is invention rather than reinvention.

In the fields of healthcare, information technology, renewable energy and beyond, we are seeing new solutions to old problems, with positive benefits for the individual, for society and for the global economy. The convergence of traditional science with digitalisation, cloud computing, automation and artificial intelligence, is fuelling a new wave of innovation that has the potential to transform economies and societies, while helping to tackle truly global challenges, from climate change to future pandemics. Growth equity funds offer a potential avenue for long-term investors to tap into these technological advances.

Emerging growth markets

Technology innovation can seem to be the exclusive domain of the developed world, with North America seen as the hub of technological progress. This stems from a well-established ecosystem that extends from education to venture capital funding. This helps convert nascent research concepts into tangible long-term commercial successes.

Nevertheless, emerging markets are increasingly driving innovation. China, for example, has transformed from a technological backwater into a technology powerhouse over the last twenty years, and has made clear its intention to continue to invest in areas such as artificial intelligence and quantum computing in the years ahead.

Emerging markets can spawn multi-national industry leaders that are more than a match for their developed market counterparts. We should expect to see more of these long-term emerging market success stories over time, as the gap between developed and developing economies continues to narrow.

Frontier markets, meanwhile, represent the next generation of emerging markets, following a path towards economic prosperity. These markets, including the likes of Thailand, Colombia, Kazakhstan and Poland, which are at an earlier stage of economic development, have the most to gain from global innovation, and are creating some extremely exciting long-term growth opportunities in the process.

Investors can gain exposure to the long-term theme of emerging and frontier market innovation through investment trusts seeking capital growth.

Necessity is the mother of technological invention

The promise of technological innovation is that it can solve the world’s biggest problems. The emergence of the climate crisis as arguably one of the greatest risks currently facing investors and the planet as a whole. Capital markets are already playing an important role here, providing capital for the technological innovations that can help continue to drive and accelerate the transition from fossil fuels. With risk comes opportunity for growth investors to capture. The potential positive outcomes are much broader than simply financial.

Looking forward, there is plenty of room for technological innovation to potentially add value to your portfolio, as well as to society and the economy more broadly. As it has done throughout history, innovation can help to deliver the answers to the biggest challenges humanity has faced. From this perspective, the future looks bright. History suggests the optimist may be rewarded.

¹ OECD - Financial Markets - 20 March 2025
² Investopedia - Why stock markets are important - 3 November 2025
³ Investopedia - Who Was Joseph Schumpeter, and What Was He Known For? - July 2022

Risk Warnings

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy.

Changes in the rates of exchange between currencies may cause the value of investments to diminish or increase. Fluctuation may be particularly marked in the case of a higher volatility fund and the value of an investment may fall suddenly and substantially. Levels and basis of taxation may change from time to time and depend on personal individual circumstances.

Fund-specific risks

BlackRock Frontiers Investment Trust plc

Counterparty Risk, Currency Risk, Emerging Markets, Frontier Markets, Gearing Risk

Description of Fund Risks

Counterparty Risk: The insolvency of any institutions providing services such as safekeeping of assets or acting as counterparty to derivatives or other instruments, may expose the Fund to financial loss.

Currency Risk: The Fund invests in other currencies. Changes in exchange rates will therefore affect the value of the investment.

Emerging Markets: Emerging markets are generally more sensitive to economic and political conditions than developed markets. Other factors include greater 'Liquidity Risk', restrictions on investment or transfer of assets and failed/delayed delivery of securities or payments to the Fund.

Frontier Markets: Frontier markets are generally more sensitive to economic and political conditions than developed and emerging markets. Other factors include greater 'Liquidity Risk', restrictions on investment or transfer of assets and failed/delayed delivery of securities or payments to the Fund. There may be larger fluctuations to the value of your investment and increased risk of losing your capital.

Gearing Risk: Investment strategies, such as borrowing, used by the Trust can result in even larger losses suffered when the value of the underlying investments fall.