"It's a discussion that's going on everywhere in our industry right now, given the high fees and what's going on with hedge funds," Steve Yoakum, executive director of the $40 billion Missouri teachers retirement funds, told CNBC. 

Calpers is the largest public pension fund in the country.

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Hedge fund fees are indeed steep, with managers often charging 2 percent of assets and 20 percent of profits above a pre-set level. And average fund returns have been mediocre since the 2008-09 financial crisis.

A composite index of hedge fund returns produced by Hedge Fund Research Inc. has underperformed a passive bond-and-stock portfolio over the past five years, according to The Wall Street Journal.

As for Calpers' hedge fund exit, "I have to think that this event will precipitate additional reductions in some institutions' allocation to hedge funds," Nick Bollen, a finance professor at Vanderbilt University, told CNBC.

"That said, pension funds and endowments need high returns to meet their funding obligations. And with bond yields still at historic lows, there will likely remain a large aggregate demand for alternatives for the foreseeable future."

Many hedge-fund experts are skeptical that pension funds might make a mass exodus. "Hedge fund investing has now become mainstream for pension funds," Alper Ince, managing director at Paamco, a fund of hedge funds, told the Financial Times.

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Related Articles:

• Investors Still Loving Hedge Funds Even as Calpers Exits: Data
• Calpers Sticks With Commodities After Dropping Hedge Funds