Public pension fund investments into hedge funds during the Great Recession: a network analysis

State public employee retirement systems in the United States control over $5 trillion in assets, with large investments in alternative asset classes like hedge funds. This paper studies public pension fund investments into hedge funds in the period immediately surrounding the 2008 Financial Crisis and the Great Recession. Using micro-level investment data, the paper examines the characteristics of this network of investment flows and compares these networks to similar investments made by private pension funds. We find that there is considerable overlap among public pension funds in their choice of hedge fund investments. While the analysis is limited by data availability, the paper provides a novel study of actual investment decisions rather than aggregate portfolio outcomes.