Last week, California Public Employees’ Retirement System, or CalPERS, announced that they were beginning to divest out of hedge funds. Relative to a 60% S&P 500 and 40% government bond mix, hedge funds in aggregate* have only outperformed once in the past ten years. Despite this, CalPERS specifically cited that it was not because of performance that they were dropping the fund, but rather because of the cost, complexity, and inability to scale. The Economist details these reasons in Hiring Hedge Funds was Never Going to Make Pension Deficits Disappear.
*Hedge Fund Research Index