I think certain S&P/ASX 200 Index (ASX: XJO) shares have great potential to deliver strong returns over time.
Typically, businesses with a strong economic moat and good growth runways are capable of outperforming the overall stock market.
Companies that have a habit of winning tend to keep winning; they don't usually turn mediocre overnight.
I'll tell you about two of the most impressive ASX 200 shares with room for lots more growth.
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Pinnacle Investment Management Group Ltd (ASX: PNI)
This is a leading investment business, which takes stakes in new or emerging funds management businesses. Its key offering is to assist with the behind-the-scenes work, to allow the fund manager(s) to focus on investing.
Some of those services include seed funds under management (FUM) and working capital, distribution and client services, middle office and funds administration, compliance, finance, legal, technology and other business infrastructure.
It's now invested in 18 funds managers including Hyperion, Plato, Resolution Capital, Solaris, Antipodes, Firetrail, Metrics, Coolabah, Aikya and Pacific Asset Management.
In my view, so many fund managers want to work with Pinnacle because it's seen as a leader in the sector.
The ASX 200 share has done very well to help the fund managers grow to the size they are. At 31 March 2025, its aggregate affiliate FUM had grown to US$159.9 billion. Investment returns are helping push the FUM higher. Net inflows, where clients give more money to a fund manager to manage, is also helping boost FUM – in the FY25 third quarter, net inflows were $6.2 billion.
In three to five years, I think this business can become much larger thanks to the organic growth of existing fund managers, as well as the potential of adding additional fund managers to its portfolio in the future.
Temple & Webster Group Ltd (ASX: TPW)
Temple & Webster is one of the most promising ASX growth shares, in my opinion.
It sells furniture and homewares on its website . It offers over 200,000 products with a drop-shipping model where products are sent directly to customers by suppliers, reducing the need for the company to hold inventory, making it a capital-light business for the amount of physical products it sells.
The business is delivering revenue growth at a very strong pace – between 1 March to 5 May 2025, revenue grew 23% year-over-year. This level of strong revenue growth means it's gaining market share.
Temple & Webster is increasingly utilising AI throughout its business to boost customer conversion, revenue and margins. In the FY25 half-year result, the company reported AI is now handling at least 60% of all customer pre-sale and post-sale support interactions, which has resulted in a reduction of customer care costs by more than 50% compared to the first half of FY23.
The company is also benefiting from scale, allowing its profit margins to improve as it grows. In HY25, fixed costs as a percentage of revenue declined to 10.5%.
I also like how the ASX 200 share is working rapidly to build a presence in the home improvement segment of the retail industry. In HY25, home improvement sales grew 41% year over year.
The company is still working on growing its annual revenue to $1 billion, and I believe it can continue growing much further than that.
