Recovery period
The number of months a fund took to climb from its maximum drawdown trough back to the prior peak NAV.
Recovery period answers the question drawdown depth alone cannot: "How long did investors have to wait in the red before breaking even?" A fund that drops 30% and recovers in 8 months is very different from one that drops 30% and takes 3 years to recover. Recovery period measures that difference.
What it measures
Recovery period is the elapsed time — measured in calendar months — between the NAV trough at the bottom of the maximum drawdown and the date when NAV first returned to (or exceeded) the pre-drawdown peak.
It tells you how long capital was effectively "frozen" in an underwater position, regardless of what the market was doing around the investor.
How it is computed
- Identify the peak date and trough date from the max drawdown calculation.
- From the trough date, scan forward through daily NAV data until:
NAV(t) ≥ NAV(peak_date). - Recovery period = number of calendar months between trough date and that recovery date.
recovery_months = months_between(trough_date, first_date_where_NAV >= peak_NAV)
If the fund has not yet recovered to its prior peak (i.e. it is currently in drawdown), MintByte reports the recovery as "ongoing" rather than omitting it.
Example: Franklin India Equity Fund peaked in January 2020 at NAV ₹620, troughed in March 2020 at ₹388 (max drawdown −37.4%). It recovered to ₹620 in February 2021. Recovery period = 11 months.
How to interpret
- < 6 months: Fast recovery — the drawdown was likely a sharp, liquidity-driven dip.
- 6–18 months: Typical equity cycle recovery for large-cap funds in India.
- 18–36 months: Extended recovery — macro or sector headwind. Common in mid/small caps.
- > 36 months: Severe structural problem or prolonged bear market. Historical examples include 2008 crash recovery (many mid-caps took 4–6 years to recover peak 2008 NAVs).
- Ongoing: Fund has not yet recovered; especially relevant for investors who entered near the peak.
A short recovery period combined with a deep MDD (e.g. −40% recovered in 9 months) often signals a resilient, liquid portfolio with strong underlying business fundamentals.
Limitations + caveats
Recovery period describes only the single worst episode (linked to MDD). A fund may have had multiple drawdowns, each with different recovery times; only the MDD episode's recovery is reported here. Recovery period also depends on the look-back window — extending from 3 years to 5 years may surface a different (worse) peak/trough episode entirely.
Related metrics
- Max Drawdown — the depth of the worst episode; recovery period explains its duration.
- Drawdowns — the full series of all drawdown episodes in the look-back.
- Rolling Returns — shows return consistency across windows, which helps contextualise whether recovery was genuine or just a mean-reversion.
Sources
Daily NAV: AdvisorKhoj API (primary). Recovery period computed alongside MDD nightly. "Ongoing" flag updated each day until recovery confirmed.