# Maximum Drawdown

The worst peak-to-trough fall before a fund recovered.

Source data: AMFI daily NAV (17,900+ schemes) + Nifty benchmark indices. Last updated: 2026-07-02. Interactive tool: https://mfpro.tigzig.com

## What is Max Drawdown?



Maximum drawdown is the largest peak-to-trough decline in NAV over a period. It answers:
 "If I invested at the worst possible time, how much would I have lost before the fund
 recovered?" It's always shown as a negative percentage.

 


## How We Compute It


 
 Track the running maximum NAV.
At each trading day: drawdown = (current NAV / running max NAV − 1) × 100
Max Drawdown = minimum of all drawdowns (the most negative)
 

Computed in DuckDB using a window function: MAX(nav) OVER (PARTITION BY fund ORDER BY date
 ROWS BETWEEN UNBOUNDED PRECEDING AND CURRENT ROW).

 


## Worked Example



Max Drawdown during COVID crash


Peak NAV: ₹320.50 (Jan 14, 2020)


Trough NAV: ₹198.20 (Mar 23, 2020)


Max Drawdown = (198.20 / 320.50 − 1) × 100 = **−38.2%**


An investor who bought at the peak lost 38.2% before the fund started recovering.

 
 


## How to Interpret





- Max DD of −15% is mild. Most equity funds hit this during normal corrections.

- Max DD of −30% to −40% is significant. Happened in 2008 and 2020.

- Max DD of −50%+ is extreme. Only in the worst bear markets.

- The period you choose matters - 5Y will likely show a bigger drawdown than 1Y.

## Related metrics

More Returns methodology from the MFPRO analytics tool:

- [CAGR (Compound Annual Growth Rate)](/mfpro/cagr-returns)

- [Rolling Returns](/mfpro/rolling-returns)

- [Standard Deviation (Volatility)](/mfpro/standard-deviation)

- [Calmar Ratio](/mfpro/calmar-ratio)

- [Beat Rate](/mfpro/beat-rate)

---
Source: https://www.tigzig.com/mfpro/maximum-drawdown