Max Drawdown
What is the worst loss this fund has ever delivered?
What is it?
Max Drawdown is the largest peak-to-trough decline in a fund's NAV over a given period. If a fund's NAV went from ₹100 to ₹65 during a crash before recovering, the Max Drawdown was −35%.
It directly answers: 'What is the worst I could have lost if I invested at the peak and then held on?' This worst-case framing is more intuitive than standard deviation for most investors.
A smaller (less negative) Max Drawdown means the fund holds up better in crashes. This is especially important for investors who cannot wait years for a recovery — those nearing retirement or with a short horizon.
Formula
Max Drawdown = (Trough NAV − Peak NAV) ÷ Peak NAV × 100Trough NAVLowest NAV value during the periodPeak NAVHighest NAV value before the troughReal Example
A large-cap fund during the 2020 COVID crash.
Given
Calculation
Max Drawdown = (68 − 105) ÷ 105 × 100 = −37 ÷ 105 × 100 ≈ −35.2%
What this means
An investor who entered at the January 2020 peak would have seen a 35.2% drop at the worst point. Recovering from a 35% drawdown requires a 54% gain just to break even.
Good vs Bad Benchmarks
0% to −15%
Fund holds up very well in crashes — strong downside protection
−15% to −25%
Typical for well-managed equity funds — painful but recoverable
−25% to −35%
Fund can suffer deep drawdowns — requires patience and a long horizon
Below −35%
Heavy losses in downturns — only for investors with 7+ year horizons
Recovery math: a 35% drawdown requires a +54% gain. A 50% drawdown requires a +100% gain.
Check this ratio for a real fund
MFLens shows Max Drawdown across 1Y / 3Y / 5Y / 7Y / 10Y rolling windows for every Indian mutual fund.
Rolling metrics on MFLens show how each ratio evolves across all historical windows of the selected period. This provides consistency insights beyond traditional trailing calculations. For informational purposes only — not financial advice.