You may have heard investment managers talk about basis points, but what exactly are they? A basis point is an important measure in wealth management used to describe changes in interest rates, equity indices, and fixed-income security yields. Small yet significant, one basis point equals 1/100th of 1%, or 0.01% (and 0.0001 in decimal form). Basis points also come into play when discussing the costs of mutual and exchange-traded funds, giving advisors helpful insights into any associated fees or expenses. The term 'basis' originates from the base move between two percentages or the spread between two interest rates. Grasping the significance of basis points can help enhance investment strategies and financial decisions. Want to dive into more financial terms? Visit our comprehensive glossary here: https://bit.ly/4brd0aA
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