What are basis points and how do they apply to my investments?

The term “basis points” is simply financial jargon that represents a fraction of a percentage:

1 basis point is .01%, or one one-hundredth of a percent
10 basis points is 0.1%
100 basis points is 1%

Financial percentages can be denoted in basis points, for example our management fee is 0.5%, or 50 basis points. It is also commonly used to track expense ratios on funds.