One hedge fund team at BlackRock Inc. saw Vladimir Putin’s invasion of Ukraine as a chance to buy more of the country’s stocks. That decision has backfired. 

BlackRock’s Emerging Frontiers Fund plunged over 10% in February, suffering the worst trading loss since it started more than a decade ago, according to people with knowledge of the matter and an investor document seen by Bloomberg. The fund, which was managing $960 million at the end of January, is now down about 7% this year, said the people, who asked not to be identified because the details are private.

Russia was one of the biggest long bets for the hedge fund at the start of February, with 9% of its gross assets invested in the country’s shares, after a research trip to the country in January, the document shows. Sam Vecht, head of the team that manages the fund, told investors he raised the bet further when the invasion began, one of the people said. The fund currently has zero exposure to Russia, after writing down all its positions, two people said.

A spokesman for the world’s largest asset manager declined to comment. 

The hedge fund is the latest investor to suffer big losses following the invasion and subsequent sanctions designed to financially isolate Russia. BlackRock halted purchases of Russian securities across its actively managed and index funds effective Feb. 28.

“We travelled to Russia at the end of January to assess the situation on the ground given our large net long position there,” the fund told clients in a letter, sent before the war began. The letter cited Russia’s large current account surplus, attractive bond returns, cheap stock valuations and undervalued currency as reasons for the bullish bets.

Despite Russian stocks losing the most for the fund in January, exposures were kept and later raised. “We believe the risk reward of being long Russian equities is favorable relative to the risk we see of conflict,” the team said in the letter. The Emerging Frontiers fund has never lost money in a full year since launching in Sept. 2011, according to the letter.

Vecht, a BlackRock veteran, is the head of the emerging Europe and frontiers team within the fundamental active equity division of BlackRock’s Active Equities Group. He manages both long-only and long-short money pools. 

This article was provided by Bloomberg News.