Naked Capitalism has the story Investment Bombshell: CalPERS Exiting Hedge Funds by Yves Smith.

CalPERS, the largest public pension fund in the US, is widely seen as an industry leader and its practices are emulated by other public pension funds. CalPERS has just announced that it is withdrawing from hedge fund investing entirely.

This is a major development in investing-land. Having the giant California investor repudiate the premise that hedge funds are an asset class and therefore a prudent investor is obligated to invest in them will legitimate other investors, including endowments and foundations, questioning the logic of putting funds with hedge fund managers.

I just hope that the Massachusetts state pension funds can get out while the getting is good.  Our state funds have a 20% holding in Hedge Funds and Private Equity.  From what I was able to glean from the article and my previous post, Mass. pension fund posts 15.2% gain for ’13, this may be as much as 10 times larger proportion than CalPERS.