The California Public Employees' Retirement System decided on Monday to study the potential impact of reinvesting in tobacco. The move comes 16 years after the pension fund dropped the controversial asset from its portfolio.

According to Yahoo! News, the decision to study the tobacco divestment by the largest U.S. pension fund has caught the attention of health groups, industry shareholders, institutional investors, and many of the CaIPERS' beneficiaries all over California. The move comes after the U.S. Department of Health and Human Services claimed that tobacco is recognized as the leading preventable cause of death in the United States.

Reuters reported that the Wilshire Associates expressed in 2015 that the majority of the CaIPERS' divestment initiatives had abridged the pension fund's portfolio returns. Specifically, it excluded that tobacco had cost approximately $2 billion to $3 billion.

Wilshire Associates also found out that a considerably larger portfolio impact than CaIPERS' other divested assets. This would include Iran, Sudan and certain firearm-linked companies.

The question to study the leading preventable cause of death in the U.S. divestment separated the CaIPERS' board into two camps. There are those who favored a review of tobacco divestment and those who chose to drop the discussion altogether and remain divested. The majority of the camps favored a study to pursue. They are considering the broader financial and economic impact of reinvesting in tobacco.

Moreover, the board members stressed out the decision would not necessarily result in CaIPERS ultimately reinvesting some of its estimated $293 billion portfolio back into the tobacco industry. Instead, the study of CaIPERS would be executed as part of the board members' fiduciary responsibility. "No one should read into this any interest in reinvesting in tobacco," CalPERS board member Bill Slaton told a board meeting via CNBC.

Meanwhile, CaIPERS will take 12 to 24 months to examine the issue. It also promised to finalize its decision prior to finally taking any action on a possible tobacco reinvestment.