In a strongly-worded investment note, Elston said he abhorred poor active management and pointed the finger at large investment firms who “peddle the notion that bigger is better”.
It has both unfairly penalised savers focusing on retirement and given the entire industry a bad name, Elston said, adding he admired Gina Miller, a long-time critic of active management and vocal opponent of Brexit.
“While I abhor poor active management, I adore Gina Miller (on a strictly professional basis I should add),” Elston said.
“I too get an itch when I think ‘people are being bullies, or being dishonest or hypocritical’. Most big fund management companies for me tick all three of those boxes.”
He added: “There’s plenty of evidence that most actively managed funds fail to beat their benchmark net of costs.
"The implication of this – and the associated headlines – is that funds that beat their benchmark have done a good job, and that funds whose performance is in line with the benchmark have achieved what they set out to achieve. This has to be wrong.”
To rid the industry of the stigma of poor active managers, Elston said funds should aim to beat benchmarks by far wider margins than many do currently.
They could start by sticking their necks out and stating by what percentage they will beat the respective benchmark measurements, such as FTSE All Share +3%.
It is something already in action at Seneca, he added.
Elston added: “I’d argue that the objectives of most actively managed funds are not ambitious enough. Perhaps this is why the active management industry is so despised. Many, including me, think it is still providing a safe harbour for the cowardly.”