Glossary › Maximum Drawdown
Maximum Drawdown
The worst peak-to-trough fall in NAV over the observed period, before any recovery.
Formula
Max DD = min over time of ((NAV_t − running_max(NAV_0..t)) / running_max(NAV_0..t))
Intuition
Imagine sitting at the highest NAV the fund ever printed up to that point — max drawdown asks: if you'd bought right at that peak, how far would you have been down at the worst point before the next recovery? It's a worst-realistic-experience number.
What to look for
Equity funds in India have historically seen 30–60% drawdowns in major market shocks. A small max DD often means low equity exposure, not skill. Compare to the benchmark's drawdown over the same window.
Caveats
It's a single worst observation, not a probability. The next drawdown might be deeper or shallower. Lens computes it across the fund's full available history.