The nation's largest public pension fund has lost one of its top money managers to a newly reorganized hedge fund manager.

Christianna Wood, senior investment officer for global equity at CalPERS, will join Capital Z Asset Management on March 17 as chief executive officer.

"Christy helped CalPERS pioneer many new investments and oversaw over $150 billion of assets dedicated to global equities as well as many of the pension groups' hedge fund allocations," said Laurence Cheng, Capital Z's chairman, in a statement.

Eric Baggesen, currently a senior portfolio manager at CalPERS, will take Wood's place on an interim basis.

"Christy has done an outstanding job for us, and we're going to miss her," said Russell Read, CalPERS' chief investment officer. "She's superbly skilled and has managed a huge, complex portfolio with great finesse and grace, resulting in great performance."

CalPERS is the nation's largest public pension fund with assets totaling more than $237 billion. It provides retirement and health benefits to more than 1.5 million public employees in California. It's also one of the biggest indexing shops in the country.

Capital Z Asset Management was formed earlier this month when its parent, Capital Z Investment Partners, completed a management buyout of its hedge fund sponsorship business. The partnership includes Paine & Partners LLC, a private equity firm with offices in San Francisco and New York City.  

Capital Z has been involved in hedge-fund sponsorship activities since 1998.

"It's like a fund for seeding emerging managers in the hedge funds industry," said Ferenc Sanderson, a Lipper analyst. "Typically they'll look for funds with a couple hundred million dollars in assets and want to take the next step up."

He says a firm like Capital Z will usually invest some of its own money into the fund shop. But in most cases, it'll use such investments in up-and-coming hedge funds as a way to pitch other institutional investors as a way to invest in top managers, notes Sanderson.

"It's interesting that CalPERS already has an existing emerging hedge fund manager program," Sanderson said. "CalPERS has started investing to some degree in new managers with relatively short records they think are very talented."

The move by the 48-year-old Wood to Capital Z could be an indication that "providing seed money and identifying the strongest emerging hedge fund managers" is where she sees industry demand heading, he added.    

"She'll go to a firm with a strong reputation and institutional framework to specialize in working with and identifying emerging hedge fund managers," Sanderson said.

In a release announcing her move, Wood pointed to Capital Z's longtime efforts to be "at the forefront of many of the most creative elements of the alternative investment management industry.

"The offer to join Capital Z Asset Management at this time was too unique an opportunity to turn down," she said.