CALPERS is America's largest pension fund, with $300 billion in assets. It just announced that it is pulling all of its money out of hedge funds. Why? Because everyone knows that hedge funds are a ripoff.

CALPERS had about $4 billion invested in hedge funds. They paid $135 million in fees on those investments last year. They are pulling all that money out of hedge funds, citing both their complexity and their expense.

Hedge funds operate by convincing investors to pay extremely high fees to hedge fund managers (whether the hedge fund makes money for investors or not) because hedge fund managers are presumably magical geniuses. Sadly, time has shown that hedge funds as an asset class are not worth the price. There seems to be a distinct shortage of actual magical geniuses.

Honest finance experts have long known that the idea that investing in hedge funds will earn you better returns than investing in other, plainer, cheaper things like stocks and bonds is "a demonstrably wrong perception." In CALPERS's decision, we have a large-scale acknowledgment of that fact.

The people who will continue to defend hedge funds are either A) People who have something to gain, such as hedge fund employees; B) People who have themselves invested in hedge funds, and are holding out hope that they will be the ones to beat the odds and strike it rich, much like lottery players hold out hope of finding the unlikely winning ticket; or C) People who do not know what they're talking about.

I'm all for soaking the rich. But I'd rather take their money for the public, not for hedge fund managers who are already richer than the people they're ripping off.

[Photo: Getty]