Exchange-traded funds (ETFs) that provide investors with exposure to precious metals mainly focus on gold and silver. But the lesser-known choice is palladium, a silver metal used primarily in catalytic converters, but can also be used in jewelry, electronics, and dental fillings.Palladium and other platinum group metals, such as rhodium and ruthenium, are somewhat rare and relatively expensive.
The United States is a relatively small producer of palladium, with an estimated 12,000 kg produced in 2019. Russia is the largest producer with an output of 86,000 kg, followed by South Africa with an output of 80,000 kg.
Palladium prices have historically been quite volatile. Prices reached a peak of more than US$2,800 per ounce in February 2020, and then plummeted to less than US$1,600 a month later. Palladium has since rebounded and the transaction price is approximately US$1,800 per ounce.Investors interested in adding palladium to their portfolio may find that the easiest way is through ETFs or similar tools.
- Several exchange-traded funds invest in palladium, a rare metal with industrial and other applications.
- Aberdeen Standard Physical Palladium Shares ETF is a pure palladium ETF.
- The price of palladium fluctuates greatly, mainly because the market is small and it is easily affected by the dynamics of supply and demand.
Physical Palladium ETF
The ETF options for investing in palladium are relatively limited, but the Aberdeen Standard Physical Palladium Shares ETF (PALL) may be the largest. As of March 31, 2020, the fund held more than 131,500 troy ounces in a safe vault in London.
The PALL Fund may be the purest palladium game, because its price comes directly from the London platinum and palladium market, which is a major platinum group metal trading center. The fund was established in December 2009 and has returned an annual rate of return of more than 17% since its establishment. The annual expense ratio is 0.60%.
Sprott Physical Platinum and Palladium Trust
Like physical palladium stock ETFs, Sprott Physical Platinum & Palladium Trust (SPPP) also holds physical gold bars instead of derivative securities. As of March 31, 2020, the ETF held more than 24,000 ounces of platinum and 44,000 ounces of palladium.
Since its establishment in December 2012, the ETF has had an annual return of 6%. If the trust unit holders meet the minimum redemption requirements, they can redeem their units in physical platinum or palladium every month. The fund’s annual expense ratio is 1.29%.
Physical precious metal basket stocks
Aberdeen Standard Physical Precious Metals Basket Shares ETF (GLTR) invests in a variety of precious metals. As of March 31, 2020, the fund holds 483 gold, 372 palladium, 191 platinum and 7,313 silver. The metals are kept in a safe vault in London. The fund has been flat since its establishment in October 2010, with an annual expense ratio of 0.60%.