One Of The Most Important Investors In The World Is Entirely Done With Hedge Funds

Calpers - the California Public Employees' Retirement System - has announced that it will completely divest itself from hedge funds, taking $4 billion out of the game, says Bloomberg.

Interim Chief Investment Officer Ted Eliopoulossaid that the problem is not that the 24 hedge funds and 6 fund of funds Calpers was invested in did/do not perform well. The problem is that they are simply too expensive and complex.

Calpers paid $135 million in fees to hedge funds during the last fiscal year. Hedge fund investments earned the pension 7.1% during that time period (overall the pension returned over 18%).

As the fifth largest pension fund in the world, and the largest in the United States with about $300 billion in assets. It wouldn't be out of this world to think other pension funds and institutional investors may follow in Calpers' footsteps.

It shrank its hedge fund investments by 40% earlier this year citing the same concerns. At that point, a Calpers representative said that the fund was going to start taking a more "back to basics" approach to investing.

That means Wall Street firms like Och-Ziff Capital Management, Bain Capital, Rock Creek Group LLC and Pacific Alternative Asset Management Co. will see some money fly out the door.