2025 saw significant shifts in market confidence, with excitement at the start, tariff worries in the middle and a strong finish. Who knows how 2026 will go? High-quality ASX shares could be the way to go.
While the share price of any company can drop, the quality of a company can shine through over time. Dips can be opportunities rather than worrying times.
Here’s what I love about the following two high-quality ASX shares.
Xero Ltd (ASX: XRO)
The accounting software business has a number of impressive metrics and the significant decline of more than 30% in the past six months makes it look like a good opportunity.
Its financials are excellent, with a gross profit margin of more than 88% and the customer churn rate is only around 1% per year.
The combination of high customer retention rate and rising subscription prices is leading to strong operating revenue growth – in the HY26 result revenue soared by 20%.
The time-saving and automation tools add a lot of value for subscribers, making customers increasingly loyal. That’s why the total lifetime value (LTV) of subscribers rose 15% in HY26 to $19.6 billion.
Net profit after tax (NPAT) is rapidly expanding, which is ultimately what investors should value a business on. The high-quality ASX share’s HY26 NPAT jumped 42% to $134.8 million. If subscribers continue climbing at a pleasing speed, it could be a very pleasing investment at this lower valuation.
Betashares Global Quality Leaders ETF (ASX: QLTY)
This exchange-traded fund (ETF) uses a quality score ranking to select shares from the global share market.
There are four factors that go into deciding which are the highest-quality businesses in the world – return on equity (ROE), debt to capital, cash flow generation ability and earnings stability.
With those elements combined, the businesses that rank the highest on the quality score should be able to perform better than average, over time, in my view.
Since its inception in November 2018, the QLTY ETF returned an average of 14.6% per year. If it continues that level of return, which is not guaranteed at all, then I’d expect it to outperform the ASX 200 Index (ASX: XJO) over in the next five years.
Currently, the biggest positions in the portfolio include Intuitive Surgical, Lam Research, Nvidia, Visa and Procter & Gamble.
The 150 positions in the portfolio are from a range of markets like the US, Japan, Switzerland, the Netherlands and France, and from different sectors like IT, industrials, healthcare, consumer discretionary, communication services and consumer staples.
I really like the diversification and returns this fund could provide, alongside a portfolio of other high-quality ASX shares.
