ETF Drawdown and Recovery Analysis
Visualize maximum losses in your ETF portfolio and recovery duration from market downturns
Benefits
Maximum drawdown
Identify the largest loss your portfolio experienced from its all-time high
Recovery duration
How many months to fall and recover. Psychologically important for long-term investing
Period analysis
Compare drawdowns during crises (2008, 2020, 2022) vs normal periods
How it works
1. Historical analysis
Index Balance examines your complete monthly return history
2. Identify peaks
Calculates all historical highs and measures declines from each peak
3. Visual reports
Drawdown charts, event table with recovery times
Frequently asked questions
What is an acceptable drawdown?
MSCI World experienced ~50% drawdown (2008) and ~35% (2020). Expect <40% in diversified portfolios
How long did MSCI World take to recover from 2008?
Approximately 4 years (2008-2012). Markets recover, but patience is required
Should I stop investing during drawdowns?
No, counterproductive. Continue periodic contributions (DCA), buying at lower prices
How does drawdown affect my Sharpe Ratio?
Directly: larger drawdowns = worse risk-adjusted returns. Minimizing drawdowns matters
Can I predict future drawdowns?
No. Analysis is historical. Psychological preparation is what matters