Drawdown
A drawdown is the loss suffered by an investment manager from “peak”, the highest cumulative return achieved prior to the start of the drawdown, to “trough”, the lowest cumulative return achieved prior to “recovery”, when the manager’s cumulative performance finally meets or exceeds the previous peak. Investors will often consider a hedge fund manager’s history of drawdowns, when deciding on an investment allocation.
You can learn more about drawdowns in our three-part series of white papers on drawdown analysis: