NEW YORK (TheStreet) -- The growing wealth of emerging markets consumers presents rich opportunity for savvy investors, with fund managers pointing to China as the region of focus.

Consider these stats: emerging market middle-class consumers are estimated to reach 960 million by 2020 against just 77 million baby boomers in the U.S. In addition, emerging markets will add an average $1.2 trillion of consumer spending to the global economy per year between 2012 and 2016 according to MasterCard, while developed markets will add just $700 billion annually.

Many fund managers are attempting to tap this demographic change through stocks that capture discretionary spending in emerging markets: travel, luxury retail, gaming, health care and education.

Mirae Asset Global Investments' Jose Morales sees the greatest number of opportunities in China, the world's largest emerging economy, as well as across SouthEast Asia.

"We're trying to capture the increasing consumption and growing purchasing power of individuals," the Emerging Markets Great Consumer Fund portfolio manager said. He pointed to the Macau gaming sector and stocks such as Galaxy Entertainment Group, listed in Hong Kong, as one way to play rising discretionary income. Other stocks Morales likes include Hotel Shilla, a South Korean operator of luxury hotels and duty-free shops, along with Turkish Airlines and select Latin American airline operators.

The fund manager holds Prada but otherwise prefers stocks with businesses that are geared toward the emerging market consumer or listed on exchanges in those countries.

In health care, he suggests Indonesian pharmaceutical company Kalbe Farma and South Africa's Aspen Pharmacare.

Morales says it is harder to find stock opportunities in emerging European economies. "Rising consumption in Europe is not evenly distributed and there are very few listed stocks (targeted at EM consumers)," he says. "But we like Magnit (a large food retailer) benefiting from the formalization of food retail in Russia and Yandex (YNDX) - Get Report, the Google of Russia." The fund manager looks past current volatility amid political jostling in the region.

Others are more wary. 

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"We are leery of political risk in Russia as we don't know how all the sanctions will affect the economy," Allianz portfolio manager Kunal Ghosh says, referencing the Ukraine crisis. "We'd only consider export-focused companies in Russia."

He agrees with Morales that investors' focus should be on discretionary retail stocks rather than staples, when aiming to ride growth in emerging markets consumption. "Emerging market listed stocks have business models that are more aligned with emerging markets consumers than developed market stocks," Ghosh adds. There are exceptions. "When then Euro debt crisis hit, stocks such as BMW and Volkswagen were affected because of their location but had good earnings growth from emerging markets," the fund manager says. Allianz no longer holds these stocks, instead preferring Korea's Hyundai and Kia, with their exposure to the biggest growth markets of China and India.

Other stocks he likes include Logitech (LOGI) - Get Report, a Swiss provider of personal computer and tablets accessories and Chinese multinational computer company Lenovo. The fund manager also points to Australia's CSL (CSL) - Get Report and Swiss company Novartis (NVS) - Get Report as stocks that draw a sizable chunk of their earnings from emerging markets.

Principal Global Investors portfolio manager Juliet Cohn notes education as another theme, especially among China's burgeoning middle class. Stocks such as TAL Education Group tap into this trend, she says. 

Amid higher returns on offer, Ghosh said investors should take factors such as stock liquidity into account when considering  emerging market stocks. "Investors should expect significantly higher growth from emerging markets as a trade off (for risk taken)," he said.

-- By Jane Searle in New York

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