---
title: "Maximum drawdown"
description: "Maximum drawdown is the largest peak-to-trough fall in a fund's value over a period, expressed as a negative percentage, before a new high is reached."
canonical: https://fundfactsapi.com/glossary/maximum-drawdown
published: 2026-09-04
updated: 2026-09-04
publisher: FundFacts API
---

# Maximum drawdown (Max drawdown, MDD, Peak-to-trough loss)

> Maximum drawdown is the largest peak-to-trough fall in a fund's value over a period, expressed as a negative percentage, before a new high is reached.

## Definition

**Maximum drawdown (MDD)** is the biggest loss an investor would have suffered by buying at the worst possible high and selling at the subsequent low within a given window. It is calculated on a total-return NAV series: for each date, compare the value with the highest value seen so far, record the percentage shortfall, and take the worst case. A series that rose to 140, fell to 98 and later recovered has a maximum drawdown of 30%.

## Why it matters

Volatility describes the typical size of moves; drawdown describes the worst experience. Two funds with the same [volatility](https://fundfactsapi.com/glossary/volatility) can have very different drawdowns if one falls in a sustained trend. Drawdown, together with time to recovery, is how many investors intuitively perceive risk, so it is common on factsheets, in risk questionnaires and in quantitative screening.

## In the API

The headline figure is `metrics.maxDrawdown`. The underlying series is available in `indexedPerformance.points`, so you can recompute drawdown over any window your product needs. Example values:

```json
{
  "metrics": { "maxDrawdown": -33.8 },
  "indexedPerformance": {
    "points": [{ "date": "2020-02-19", "value": 141.2 }, { "date": "2020-03-23", "value": 93.5 }]
  }
}
```

```typescript
function maxDrawdown(points: { value: number }[]) {
  let peak = -Infinity, worst = 0;
  for (const p of points) {
    peak = Math.max(peak, p.value);
    worst = Math.min(worst, (p.value / peak - 1) * 100);
  }
  return worst;
}
```

## Common pitfalls

The value depends heavily on the window (three years, five years, since inception) and on sampling frequency: daily data finds deeper troughs than monthly data. Fund houses do not all use the same window, so compare like with like. Sign conventions vary; the API returns a negative number.

## In the FundFacts API payload

- `metrics.maxDrawdown`
- `indexedPerformance.points`

## About FundFacts API

FundFacts turns any fund or ETF ISIN into one dated factsheet (fees and KID costs, the 1–7 risk indicator, holdings, sector and country exposure, returns) read from the fund house's own documents: as a client-ready PDF under your firm's name for advisers and wealth managers, as JSON through its API for developers, or inside ChatGPT and Claude through its MCP server.

FundFacts works inside ChatGPT and Claude as a connector (a remote MCP server): ask about any fund or ETF by ISIN, ticker or name and the assistant answers from FundFacts' dated figures, fees, risk, holdings, exposure and returns, with fund cards, side-by-side comparisons, holdings overlap and portfolio look-through.

- Free API key, no card: https://fundfactsapi.com/signup
- Documentation: https://fundfactsapi.com/docs (OpenAPI: https://fundfactsapi.com/openapi.json)
- MCP server: https://fundfactsapi.com/api/mcp (set-up for every client: https://fundfactsapi.com/mcp-server)
- Pricing: https://fundfactsapi.com/pricing
- Site index for AI assistants: https://fundfactsapi.com/llms.txt
- Informational data, not investment advice.