High-conviction investing is not about owning dozens of shares or reacting to every market headline. It is about identifying a small number of exceptional businesses and being willing to back them through market cycles.
This approach requires patience and discipline. It also requires comfort with short-term volatility in exchange for long-term compounding.
Rather than trying to predict what the market will do next, the focus is on what a business could look like many years from now.
Here is how I would go about building a high-conviction ASX share portfolio.
Start with a clear framework
Before choosing any ASX shares, I would define what earns a place in the portfolio.
For me, high-conviction picks tend to share a few characteristics. They operate in markets with long-term growth drivers, they have competitive advantages that are difficult to replicate, and they are run by talented management teams.
Importantly, I would be comfortable owning these businesses even if markets fell sharply in the short term.
Focus on quality
A high-conviction ASX share portfolio should be anchored by businesses with proven quality.
One example could be CSL Ltd (ASX: CSL). It operates in essential healthcare markets, benefits from structural demand growth, and has spent decades building scale, expertise, and intellectual property.
Another is Cochlear Ltd (ASX: COH). Its leadership position, deep clinician relationships, and high switching costs make it the kind of business that can compound steadily over long periods.
These types of companies could form the backbone of a high-conviction ASX share portfolio.
Add scalable growth engines
Once a quality foundation is in place, I would look to add businesses with clear scalability.
TechnologyOne Ltd (ASX: TNE) is a good example. Its mission-critical software, high recurring revenue, and low customer churn provide strong earnings visibility. With international expansion and ongoing product development, the company still appears to have a long growth runway ahead. Management believes it can double in size every five years.
I would also look for exposure to global infrastructure-style growth through businesses like Goodman Group (ASX: GMG). Its development-led model and exposure to logistics and data centres give it leverage to long-term trends such as e-commerce, automation, and digital infrastructure demand.
These businesses could deliver growth without relying on economic perfection.
Keep the ASX share portfolio focused
A high-conviction ASX share portfolio does not need many holdings.
In fact, too much diversification can dilute the impact of great ideas and could lead to diworsification. I would rather own five or six businesses I understand deeply than twenty I barely follow. This also makes it easier to stay invested during periods of volatility, because each holding has a clear long-term role.
Position sizing matters too. No single stock should dominate the portfolio, but the strongest ideas should be allowed to meaningfully contribute to returns.
Foolish takeaway
Building a high-conviction ASX share portfolio is about patience and quality businesses.
By focusing on a small number of shares with competitive advantages, long growth runways, and proven execution, investors can give themselves a better chance of benefiting from long-term compounding.
The post How I’d build a high-conviction ASX share portfolio appeared first on The Motley Fool Australia.
Should you invest $1,000 in Cochlear Limited right now?
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Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Cochlear Limited wasn’t one of them.
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* Returns as of 1 Jan 2026
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More reading
- Here are the top 10 ASX 200 shares today
- 3 incredible ASX growth shares to buy and hold forever in 2026
- The ASX 200 stocks I’d be happy to hold until retirement
- How I’d build a $1,000-a-month passive income from ASX shares
- 3 ASX 200 blue-chip shares I would buy with $100,000
Motley Fool contributor James Mickleboro has positions in CSL, Cochlear, Goodman Group, and Technology One. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL, Cochlear, Goodman Group, and Technology One. The Motley Fool Australia has recommended CSL, Cochlear, Goodman Group, and Technology One. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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