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Value investing has evolved since the 1970s and other notable value investors include Warren Buffet, Mr Graham’s most famous student. John Templeton is also well known for his success in buying shares in the aftermath of the stock market crash of 1929.

Carl Stick manages the Rathbone Income fund based around similar value principles. He believes value investing is about buying into businesses on a long-term view based on their intrinsic value. He looks for undervalued companies that are highly cash generative, with strong balance sheets and pricing power to ensure they can weather the storm better than most. These factors can offer this margin of safety.

It would be wrong to think there is no attention paid to growth. Mr Stick feels it is vital to protect longer-term growth. He looks for visibility in earnings through barriers to entry, for example. Factors that make it harder for competitors to succeed such as brand names, dominant market position and low costs should ensure good predictability of returns.

A good deal of importance is placed on dividends and dividend growth in this 65-stock portfolio. The fund has a net yield of 4.01 per cent and Mr Stick believes this can exert a significant influence on overall returns, particularly when compounded over the longer term. This fund has grown its dividend every year for the last 14 years and is set to increase it again by around 5 per cent this year.

You only need to look at this year’s Barclays Equity Gilt study, which illustrates the power of dividends. If you invested £100 in equities in 1945 with gross income reinvested it would have grown to £131,639. Stripping out the income, the return would have only been £8511.

Mr Stick is the first to admit his fund, like many other UK equity income funds, has had a tough time. This brings us back to the point of value investing being for the long term. When he manages the portfolio he does not lay the foundations for the next six months, but for the next five years.

The average holding period for a stock in US mutual funds is only nine months according to Mr Stick. The average holding period in this fund is five years, making the turnover very low at 20 per cent a year.

In terms of the fund positioning, banks make up 8 per cent of the portfolio and, although underweight, this is currently focused on companies like HSBC and Standard Chartered, which he believes have more solid balance sheets. Mr Stick still likes the utilities, however, where valuations have come back and are looking reasonably attractive again. Exposure to the large mining companies has been sold as the manager feels valuations are stretched, but he still finds the smaller miners attractive.

Although there has been a general increase in the fund’s exposure to the FTSE100 at the expense of smaller companies, the fund remains underweight the FTSE100, with it making up 51 per cent of the portfolio, while mid caps account for 28 per cent, small cap and Aim for 16 per cent and cash for 5 per cent. This would therefore be considered a spicier equity income fund that could dovetail well with a larger company fund.

Last year was great for growth areas like mining and emerging markets. However, we could be approaching a time of great opportunity for value investing. Mr Stick believes there are strong similarities between now and the period following the burst of the technology bubble when equity markets struggled. This period laid the foundations for many value investors, and there are some excellent long-term growth prospects for funds like Rathbone Income.

Meera Patel is senior funds analyst at Hargreaves Lansdown