What the number is
Max drawdown answers one question: what was the worst moment for someone who bought at the top? It takes the fund's NAV through time, tracks the highest value seen so far, and finds the biggest percentage drop from any such high to the low that followed.
It is not a return, an average, or a probability. It is one observed episode, the single worst one in the window. A fund that fell 30% in 2020 and has been making new highs since still carries that 30% in its life-long figure.
Two windows, two answers
A fund page shows drawdown over two spans: the whole history and the trailing three years. They answer different questions, and for the same fund they can be far apart. Here are three funds at 19 October 2026.
| Fund | Worst fall, whole history | Worst fall, last 3 years | Volatility | 3-year return (a year) |
|---|---|---|---|---|
| HDFC Flexi Cap Fund | -41.8% | -13.3% | 12.2% | 14.4% |
| HDFC Mid Cap Fund | -39.5% | -16.8% | 15.0% | 15.2% |
| Axis ELSS Tax Saver Fund | -33.5% | -16.5% | 13.5% | 9.4% |
All three are Direct plan, Growth option. The whole-history figure for each is two to three times the three-year figure. The big falls in the long record happened before the current window began.
How to use each window
The whole-history number shows the worst the NAV has been through. For a fund that began before a major crash it records that crash, so it is the figure to look at when asking how bad a fall can get. For a newer fund the two numbers are the same, because the history is shorter than three years; that tells you nothing about how it would behave in a bad market, only that it has not met one yet.
The three-year number shows the recent past. It drops older episodes, so it can improve from one month to the next as a bad stretch leaves the window. Across ten equity categories the median three-year worst fall to 19 October 2026 ran from -16.4% for large caps to -24.1% for small caps, as set out in the category table.
Neither says when. A drawdown tells you depth and not duration. Two funds with the same -20% can differ by months or years in how long they stayed below their old peak.
The recovery arithmetic
A percentage fall and the percentage rise needed to undo it are not the same number, because the rise is measured from the lower level.
| Fall | NAV left | Rise needed |
|---|---|---|
| -10% | 90 | +11.1% |
| -16.4% | 83.6 | +19.6% |
| -24.1% | 75.9 | +31.7% |
| -33.5% | 66.5 | +50.4% |
| -41.8% | 58.2 | +71.8% |
The formula is simply 1 divided by the NAV left, minus 1. This is why deep drawdowns are disproportionately costly: a 41.8% fall needs nearly three-quarters more growth, not 41.8% more.
Reading it with other numbers
- Volatility measures the everyday size of swings. A drawdown is the extreme episode. A fund can have moderate volatility, like HDFC Flexi Cap's 12.2%, and still have a deep long-run fall if one crash was severe.
- Return matters next to it. A deep fall with a high return can be a different thing from a deep fall with a low one; the table's three-year return column is there for that reason.
- Capture ratios split the same story by market direction. Upside and downside capture by category shows how funds behaved when the index rose and fell.
- Beta compares a fund's moves with the index's, as in equity fund beta.
Where to find it
Open any fund page: drawdown and volatility sit with the other risk figures, and the screener can sort a whole category by them. Where each number comes from is set out in the methodology and glossary guide.
Drawdown is a record of what happened. It is not a forecast of what the next fall will look like.
Frequently asked questions
What is maximum drawdown in a mutual fund?
The largest percentage fall from a fund's highest NAV to a later low, before a new high is reached. If the NAV goes from 200 to 150, the drawdown is minus 25%.
Why are there two drawdown figures for one fund?
One covers the fund's whole NAV history and the other only the last three years. HDFC Flexi Cap Fund shows -41.8% for its history and -13.3% for the last three years.
If a fund falls 40%, how much must it rise to recover?
About 72%. A fall of 41.8% needs a rise of 71.8%, because the gain is measured on a smaller base: 100 divided by 58.2 is 1.718.
This is commentary on published data, not investment advice. WealthTicker is not a SEBI-registered adviser or distributor. Figures are WealthTicker’s own calculations from public data — AMFI’s fund NAVs and disclosures, NSE’s index and FII/DII files, and the fund houses’ monthly portfolios (how we calculate). They are as of the dates stated and can be revised by their source.
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