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.
Related Terms
Expense Ratio, Net Asset Value (NAV)
