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Critics have long argued that hedge funds — unregulated, often opaque, and high-priced investment vehicles for the very wealthy — don't live up their mystique.

Now the nation's largest and most closely watched pension fund agrees.

On Monday, the $298 billion California Public Employees' Retirement System would be liquidating its $4 billion investment in hedge funds, which it called overly complex and costly, Bloomberg reported.

Many Wall Street critics, perhaps feeling vindicated, let out a big cheer. With his characteristic bluster, Barry Ritholtz, blogger and founder of Ritholtz Wealth Management, called the event an "earthquake."

Exaggeration or not, Calpers is closely watched because of its size and because it has been an innovator before. It was one of the earliest big public pension funds to bet on hedge funds in the first place. Meanwhile, hedge funds have long relied on an image of sophistication and exclusivity to win customers, despite their steep investment fees. So losing a customer of Calpers stature could be a big blow.

Dropping hedge funds isn't the only thing Calpers has done recently to simplify its investment portfolio. Last month it also said it was considering cutting back it's holdings in actively managed stock strategies and emphasizing low-cost index funds instead. That move was similarly cheered.

What does the latest Calpers decision mean for individual investors? Most of us aren't wealthy enough to have hedge fund holdings, which typically have high investment minimums.

But the mutual fund industry has been leaning on hedge fund's cache to market a new investment product typically called "alternative funds."

Alternatives have turned out to be one of the fastest growing mutual fund categories, with assets reaching nearly $150 billion, up from less than $25 billion a decade ago, according to Investment News and Morningstar.

Like the original hedge funds these often involve hard-to-parse investment fees. If your financial advisers pitches them, be sure to ask why he or she thinks they will work out better for you than they did for Calpers.