There are several high-quality ASX-listed share investments available for Australians to invest in. The two I'll highlight today are two of the best that investors can buy.
I strongly believe that long-term winners are likely to continue winning due to their sound economics, competitive advantages, and ability to generate revenue growth in various ways.
If I were investing $2,000 today, the two ideas below would be right at the top of my list.
Xero Ltd (ASX: XRO)
Xero is a leading cloud accounting software business which has managed to capture a strong market share in a number of countries, particularly New Zealand, Australia and the UK.
With the world moving increasingly towards technology and digital tax reporting, this seems like a business benefiting from strong tailwinds.
The company has an annual subscriber loyalty rate of around 99%, which suggests subscribers love the software. This low churn rate means the company has locked in significant revenue for the long term while also giving it the power to regularly increase prices without losing many subscribers.
I believe the rising average revenue per user (ARPU) is a key reason to think the company's earnings can continue growing for a long time to come. In the HY26 result, Xero's ARPU rose 15%, helping annualised monthly recurring revenue (AMRR) grow 26% to $2.7 billion, net profit increased 42% and free cash flow surged 54% higher.
If the business can continue to win more global subscribers, deliver a higher ARPU, and achieve a stronger net profit after tax margin, then I'll continue to believe it's one of the best ASX shares to own for the long term.
VanEck MSCI International Quality ETF (ASX: QUAL)
I think this exchange-traded fund (ETF) is one of the most effective ways to invest in high-quality shares around the world.
I'm calling this an ASX share because we buy it on the ASX, and it gives exposure to shares. It actually has a stake in 300 companies, making it very effectively diversified, in my opinion.
These companies come from across a range of geographies and sectors, which means it's very effective at ticking the diversification box.
But, it's not just about diversification. For me, the most important element of this fund is that it invests in high-quality businesses that are judged on three characteristics – a high return on equity (ROE), earnings stability and low financial leverage.
The QUAL ETF has performed strongly with this investment strategy, achieving an average return per year of 14.4% over the last decade. While it's not guaranteed how it'll perform in the next decade, I think it has a very promising future with great holdings.
I'm planning to increase my investment in this ETF in the coming weeks.
