Maximum drawdown
Maximum drawdown is the deepest fall from a peak to the trough that follows it within a period. At −30 %, 10,000 € temporarily became 7,000 €. It answers the question of how much setback actually had to be endured in the past.
- Crisis territory
- Broad equity markets fell this far in the 2008 financial crisis. Recovery took four to six years depending on the market.
- Severe decline
- Typical for a pure equity portfolio in a genuine bear market. Selling here locked the loss in.
- Ordinary correction
- Setbacks of this size hit equity markets roughly every three to five years and are part of the long-run path.
- Mild path
- Either a defensive portfolio or a short window without a crisis. Check whether the period contains a setback at all.
How it is calculated
Max drawdown = min( ( value[t] − peak[up to t] ) / peak[up to t] )
A portfolio peaks in January at 42,000 €, falls to 30,200 € by October, and rises again afterwards. Drawdown measures exactly that stretch.
- Peak
- 42,000 €
- Trough
- 30,200 €
- Difference
- 11,800 €
- Max drawdown
- −28.1 %
What the number does not tell you
- It is a single event, not an average. The value comes from exactly one phase in the period. Whether there were ten smaller setbacks or only this one does not show.
- It says nothing about duration. A 30 % decline recovered within four months feels entirely different from the same decline with a five-year wait. Recovery time is reported separately for that reason.
- It grows with the window. The longer the period, the likelier it contains a crisis. A drawdown over three years is not comparable to one over twenty.
- It is not a floor. The worst decline of the past is no assurance that nothing worse follows. For hypothetical crises, the stress test is the right instrument.
Related metrics
How Evergrova calculates it
On the Performance & Risk page, maximum drawdown is shown alongside the date your portfolio regained its former peak. If it reads "not yet recovered", the drawdown is still running.
Data basis: daily portfolio value path over the selected window.
View the demo portfolioCommon questions
What was the maximum drawdown of the MSCI World?
In the financial crisis the index fell by a good 50 % in euro terms, from its late-2007 peak to the March 2009 trough. In the 2020 COVID crash it was around 34 % within a few weeks, recovered within the same year.
What does "not yet recovered" mean?
That your portfolio has not regained the peak it held before the deepest decline. The drawdown is therefore still running. That is an observation about the price path, not a signal to act.
Drawdown or volatility, which matters more?
They describe different things. Volatility measures everyday restlessness, drawdown measures the worst case. For the question of whether you can hold a course, drawdown is usually the more telling number.
Last reviewed: 2026-08-08