Basis Point Definition
Learn the definition of basis point and other ETF terminology from the etf.com glossary.
Learn more about Basis Point
A basis point (BP) is a unit of measure used to express small changes in the value of an ETF or the performance of its underlying assets. It represents one-hundredth of one percent (0.01%). Basis points are commonly used to describe changes in interest rates, bond yields, and ETF expense ratios. For instance, if an ETF's expense ratio increases from 0.25% to 0.26%, this change would be expressed as a 1 basis point increase. Similarly, if an ETF's net asset value (NAV) decreases by 0.10%, this would be represented as a 10 basis point decline. Basis points are a convenient way to express small changes, particularly when dealing with percentage values. They allow for more precise and nuanced comparisons between different ETFs or their underlying assets.
