Recovery Time (Recovery Period) is the time taken for a fund's NAV to recover from its maximum drawdown back to the previous peak — a critical measure of resilience after a market crash.
Recovery Time measures how long an investment takes to return to its pre-crash NAV after experiencing a maximum drawdown. A fund that falls 40% needs an 80% gain to recover — the longer this takes, the more damaging the drawdown was for actual investors. Recovery Time is studied alongside Maximum Drawdown (how deep the fall) and Drawdown Duration (how long the fund stayed below its peak). Together, these three metrics define the full damage profile of a market crash for a specific fund.
If a fund fell from ₹100 NAV to ₹60 NAV (40% drawdown), it needs to grow back to ₹100 to recover. The time between hitting ₹60 (the trough) and returning to ₹100 (the peak) is the Recovery Time. A fund that bounced back in 8 months is far more investor-friendly than one that took 4 years. Short recovery times = resilient fund; long recovery times = investors were stuck in pain for years.
Identify the drawdown: date of peak NAV and date of trough NAV.
Recovery Time = date when NAV first exceeded previous peak − trough date.
Express in months or days.
Average Recovery Time across multiple drawdown episodes shows portfolio resilience.
Compare to benchmark recovery time — a shorter recovery vs benchmark = active management added value.