ASX growth shares can produce excellent returns over the long term if we buy the right ones at a good value.
Smaller businesses have more growth potential because they are much earlier in their growth journeys than large businesses. The two investments I'll outline below have already delivered impressive returns in the last few years, and I think they can deliver plenty more.
The world is dealing with more volatility amid tariffs and other issues, but I'm confident in the long-term potential of quality businesses to continue growing and delivering for shareholders. That's why I'm bullish on the following investments.
VanEck MSCI International Small Companies Quality ETF (ASX: QSML)
This is an exchange-traded fund (ETF) focused on (relatively) small global businesses with a number of positive attributes.
Businesses listed overseas usually have a presence in multiple countries, giving them a bigger growth runway, in my opinion. But it's not just earnings growth that makes this ASX ETF compelling. I'm calling it an ASX growth share because it can be bought on the ASX.
For a company to be considered for this portfolio, it must tick three boxes: high return on equity (ROE), earnings stability, and low financial leverage. In other words, it must make a lot of profit for how much shareholder money is retained within the business, its earnings shouldn't go backwards, and it should have low levels of debt for its size.
There are 150 names inside the ETF, so it offers a pleasing amount of diversification, in my view.
Past performance is not a guarantee of future performance, but the QSML ETF has returned an average of 14.2% per year in the three years to 30 April 2025. That's a strong pace of wealth creation in my view.
Tuas Ltd (ASX: TUA)
I'm excited about the long-term potential of Tuas because of how quickly it's expanding.
It has grown its presence in Singapore's mobile market to more than 1 million active subscribers. The FY25 half-year result saw revenue rise 33.8% to $72.3 million and operating profit (EBITDA) surge 47.8% to $33.1 million.
Operating leverage, where profit margins increase, is one of the most important factors for an ASX growth share, in my opinion. It allows profit to grow faster than revenue. Profit generation is usually what investors focus on to value a business.
I'm not expecting Tuas to become the dominant mobile player in Singapore, but I do think it can continue growing its market share and its fledgling Singapore broadband business to a meaningful size.
I am bullish on the business because of its potential to grow in other Asian countries, such as Malaysia, which has a larger population than Singapore. Expanding to other countries could enable the company to achieve a much larger profit in the future.
