Assets at hedge funds, once a niche investment vehicle for ultra-wealthy investors, hit a record $2.8 trillion this year. There are now more than 10,000 hedge funds and counting. Their steep fees have minted scores of billionaire managers and spawned not a few criminals in what has turned into a gold rush of the 21st century.

Their high-water mark may turn out to be Sept. 15, 2014.

That’s the day Calpers, the California Public Employees’ Retirement System, announced that it was terminating its $4.5 billion hedge fund portfolio to “reduce complexity and costs.”

As the biggest public pension to publicly turn its back on hedge funds — Calpers had over $300 billion in total assets at the end of its most recent fiscal year — “this is a watershed moment,” said Timothy Keating, president of Keating Investments in Greenwood Village, Colo., an investment adviser and author of several studies on asset class performance.

The decision startled the investment world, but it was hardly spur of the moment. Under the direction of Ted Eliopoulos, who was confirmed as Calpers’s chief investment officer last week, the pension fund has been examining hedge funds since February, when it revised its broad asset allocations and demoted hedge funds to a “program” rather than a separate asset class with a specified allocation target. Since hedge funds cover a wide swath of investment strategies, be it investing in and betting against stocks or fixed income and arbitrage strategies, they were hard for the fund to classify. Once the official reassessment was underway, some troubling conclusions emerged.