Drawdown — Mutual Fund Term Explained

The percentage decline from a fund's peak NAV to its subsequent trough. Shows how badly a fund fell from its high point.

Drawdown is the decline from a fund's historical peak to a subsequent low. If a fund's NAV went from ₹100 to ₹70, the drawdown is -30%.

Small cap funds can have 50-60% drawdowns during bear markets; large cap funds typically 30-40%.

Formula

Drawdown = (Current NAV − Peak NAV) ÷ Peak NAV × 100

Related terms

• Maximum Drawdown — The largest peak-to-trough decline in a fund's history. Represents the worst-case loss an investor could have experienced.
• Standard Deviation — How much a fund's monthly returns fluctuate around their average. Higher = more volatile = higher risk.

Browse the full mutual fund glossary, or see this concept in action in the fund screener.