1. Maximum Drawdown (MDD) is an essential risk measure that helps fund managers and investors evaluate the potential loss from peak to trough in an investment, particularly relevant in the context of Indian mutual funds.

2. MDD, while providing an intuitive understanding of the worst-case scenario for an investment and being effective with non-normal distributions, has certain limitations such as bias towards past performance and extreme events, and does not account for the recovery timeframe.

1. The Average Drawdown is a crucial financial metric that helps in evaluating the risk in mutual fund investments. It measures the average decline from the peak to the trough in the value of an investment over a specified period.
2. Understanding the concept of Average Drawdown can assist investors in making informed decisions, as it offers insights into potential losses during unfavorable market conditions.
3. Drawdown refers to the measure of the decline from the highest point of investment value to the lowest point, while Average Drawdown calculates the mean of these declines over a particular period.

Investing in mutual funds is one of the most popular ways to build wealth over the long term. However, like any investment, mutual funds come with their share of risks. It is essential to understand and assess these risks to make informed investment decisions. This article aims to shed light on some of the key risk assessment tools for mutual funds - standard deviation, semi-deviation, value at risk, average drawdown, and maximum drawdown. The calculated values of all these risk parameters are available on the website.