What is max drawdown?
Every other risk metric on this page is a statistical summary. Max drawdown is one real, specific event: the largest actual decline from a peak to the lowest point before recovery, within the lookback window.
Drawdown = (NAVtrough − NAVpeak) / NAVpeak
Max drawdown is the single worst such decline across the whole window - not an average.
Real comparison across 6 funds
CHART
3Y Max Drawdown - 6 real funds
Parag Parikh Flexi Cap's worst stretch ran from 2025-10-27 to 2026-03-30, a 10.9773% peak-to-trough decline.
Funds compared: Parag Parikh Flexi Cap · DSP Value · ICICI Prudential Value · SBI Focused · Parag Parikh ELSS Tax Saver · SBI Multicap
Reading the spread
Across these 6 funds, 3-year maximum drawdown runs from -15.11% (SBI Multicap) to -10.98% (Parag Parikh Flexi Cap), a gap of 4.14%. The middle value is -13.85%, with 3 of 6 above it. Taking higher as better, Parag Parikh Flexi Cap leads and SBI Multicap trails on this measure alone.
How to use it in practice
Maximum drawdown answers the question investors actually feel: how much of my money could I have watched disappear? It measures the biggest fall from a peak to a later low. Use it to check whether you could have held on through the worst stretch the fund has had. Compare it with the fund’s category peers over the same window, because a 15% fall means something different in a large cap fund than in a small cap fund.
Common mistakes
A drawdown is a single worst episode, so it depends heavily on the window and on when that window starts. A fund launched after a crash has no big drawdown to show. It also says nothing about how long the recovery took, which matters as much as the depth. Treat it as a floor on what has happened, not on what can happen: a worse fall is always possible than the worst one on record.
Frequently asked questions
What is a good maximum drawdown?
Smaller is better, but the right comparison is against peers in the same category over the same window. A large cap fund with a 12% drawdown and a small cap fund with a 25% drawdown can both be normal for their category.
Is maximum drawdown the same as the biggest one-day loss?
No. It measures the largest fall from a peak to a subsequent low over any length of time, which can run over weeks or months. A fund can have mild daily moves and still suffer a deep drawdown over a long decline.
How is it different from standard deviation?
Standard deviation measures average variability in both directions. Maximum drawdown measures the single worst peak-to-trough loss, so it describes what an investor who bought at the top would have experienced.
WHAT THIS MEANS FOR YOU Max drawdown is a real event that already happened, not a statistical estimate - it’s the closest thing to “how much could I actually lose, and did lose” that any of these metrics offer.
METHODOLOGY Computed over a trailing 3-year window as of 2026-08-31, using daily NAV history. Data: Punji risk analytics. Not investment advice.