Investors have plenty to worry about at the moment what with the upcoming UK referendum on EU membership, volatile commodity markets and a growth slowdown in China.

However, top fund manager Neil Woodford continues to believe that his equity income fund’s core blue-chip companies can still deliver in an uncertain and low-growth world.

If you’re looking for shares for your ISA in these difficult times, GlaxoSmithKline (LSE: GSK), Legal & General (LSE: LGEN) and Imperial Brands (LSE: IMB) — three Woodford core holdings — have a lot going for them.


A Woodford fund update almost a year ago said: “GlaxoSmithKline is a long-term holding and one which has been frustratingly disappointing for much of the holding period”.

Last month, Glaxo reported a further decline in earnings in its annual results, the share price remains depressed … and Woodford and his team maintain their faith, saying recently: We continue to see substantial long-term value, believing that the sum of Glaxo’s constituent parts is significantly greater than the whole, as reflected by the current share price”.

Indeed, Woodford, and a number of other major shareholders, have for some time been calling for a radical, value-unlocking restructuring of Glaxo: a break-up, or partial break-up, of the four-business conglomerate.

An announcement last week that chief executive Sir Andrew Witty will retire in March next year could open the door for change. Not surprisingly, Woodford has expressed a “strong preference for an external candidate” to replace Witty.

Glaxo has decent prospects in its present form, with a return to growth expected this year, but there’s potential for shareholder returns to be significantly enhanced by the kind of restructuring Woodford and others are pressing for.

Legal & General

Insurer and asset manager Legal & General has seen its shares under pressure this year. The market has been concerned about the company’s corporate bond portfolio in an environment of deteriorating credit quality in the asset class, particularly in the troubled oil and mining sectors.

Woodford and his team are less concerned, saying early this month: We are reassured about its quality and diversity. We see [L&G’s] recent weakness as unjustified, given its strong cash generation, high yield and the fact that it looks well placed to deliver attractive rates of dividend growth.”

L&G has subsequently released results showing cash generation up 14% and a 19% dividend increase, giving ample support to Woodford’s view.

Imperial Brands

Imperial Brands has recently changed its name from Imperial Tobacco, but the business hasn’t changed and neither has Woodford’s positive view on the industry and the company.

Stephen Lamacraft, the Woodford team’s mature blue-chip specialist, recently reiterated that: “Tobacco has, over the years, proven itself to be an extremely dependable industry — delivering steady and sustainable growth in cash flows, earnings and dividends year in, year out, regardless of the economic environment”.

As far as Imperial Tobacco, in particular, is concerned, he added that last month’s trading update demonstrates “the stock’s attractive and dependable growth characteristics”.

Glaxo, L&G and Imperial all appear solid core holdings for a portfolio. And if you're looking for more quality blue-chips, you should certainly take time out to read about the Motley Fool's five elite FTSE 100 shares.

You can discover why our analysts are so confident these five businesses have what it takes to deliver top-notch returns through thick and thin in this FREE in-depth report.

This report comes with no obligation, but is available for a limited time only, so click here now for your free copy!

G A Chester has no position in any shares mentioned. The Motley Fool UK has recommended GlaxoSmithKline. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.