The California Public Employees' Retirement System (Calpers), the largest United States pension fund, is getting rid of hedge funds over the next year, saying they are too complicated and expensive.
Hedge funds are pooled investment funds that bet on a wide range of speculative strategies, including going both long and short on stocks and dipping into unconventional and illiquid investments.
However, hedge funds represent only $4 billion of the nearly $300 billion controlled by Calpers. In the fiscal year that ended June 30, Calpers paid $135 million in fees for hedge-fund investments that earned 7.1 percent, according to Bloomberg News.
That's paying a lot for unimpressive performance.