Maximum drawdown: the worst fall you would have sat through
Aeterna Wealth · figures from our fund data, updated 12 Nov 2026
Maximum drawdown is the largest fall in a fund's NAV from a peak to a later low, before it recovered. It answers the question every investor faces: how much could I have been down at the worst moment? Over the last 3 years the median large cap fund's deepest fall was about 16.9%, the median small cap fund's 24.3%. Over longer periods that include 2008 or 2020, falls of 35 to 60% have been normal for equity funds.
Why it matters
It tells you whether you could have held on. Most investors who lose money in equity funds lose it by selling near the bottom of a fall like this, not because the fund failed.
How to use it
- Compare funds in the same category over the same period.
- Ask yourself honestly whether you would hold through that fall with your own money. If not, the category is too risky for you.
- Look at how long the fund took to recover, not just how far it fell.
Common questions
Is a smaller drawdown always better?
It is easier to live with. But compare with the return: a fund that never falls much may also never rise much.
Which period do you use?
The last 3 and 5 years, shown on every fund page.
How much can a small cap fund fall?
Small cap funds fell 50 to 70% in 2008 and around 40% in early 2020; that is the risk that comes with their higher long-run returns.
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General information, not investment or tax advice for your situation. Mutual fund investments are subject to market risks; read all scheme-related documents carefully. Past performance does not guarantee future returns.
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