In spite of the dismal performance of his hedge fund, Goldman Sachs’ Mark Carhart is getting a promotion. But that promotion is getting a rude welcome from an important client.

The Massachusetts Pension Reserves Investment Trust, in a memorandum yesterday, revealed that Carhart is to become co-chief investment officer of Goldman’s quantitative equity group, with eventual plans to succeed his co-chief, Robert Jones. Carhart is best-known as the head of the firm’s quantitative strategies group, and as the co-portfolio manager of Goldman’s flagship hedge fund, Global Alpha.

Unfortunately for Carhart, the Bay State also revealed its response to the changes at Goldman, terminating its contract to run a $1.2 billion “enhanced equity” portfolio for the pension fund.

“It all comes down to confidence in the managers,” Stan Mavromates, chief investment officer of the pension fund, said at a meeting yesterday. “They are having significant management changes. We feel very uncomfortable with those changes.”

Global Alpha, once dubbed the Cadillac of hedge funds, suffered a disastrous 2007, losing 40% as its quantitative models failed to handle the wild market volatility. It was the second straight down year for the fund, which had previously known nothing but success.

As part of the changes, Carhart’s group will be merged into the larger quantitative equity group, which manages some $130 billion. In addition, the group has fired 20 people.