Exchange traded funds (ETFs) that offer investors exposure to precious metals primarily focus on gold and silver. But a lesser-known option is palladium, a silvery metal used mostly in catalytic converters but also has applications in jewelry, electronics and dental fillings. Palladium and other platinum-group metals, such as rhodium and ruthenium, are somewhat rare, keeping their prices relatively high.
The U.S. is a relatively minor producer of palladium, generating an estimated 12,000 kilograms in 2019. Russia was the biggest producer, with 86,000 kilograms, followed by South Africa at 80,000 kilograms.
Palladium prices have historically been fairly volatile. Prices peaked at more than $2,800 per ounce in February 2020 before plummeting to less than $1,600 a month later. Palladium has recovered somewhat since then, trading for around $1,800 an ounce. Investors interested in adding palladium to their portfolios might find the easiest path is through ETFs or similar vehicles.
- There are several exchange traded funds that invest in palladium, a rare metal with industrial and other applications.
- The Aberdeen Standard Physical Palladium Shares ETF is a pure-play palladium ETF.
- Palladium prices are volatile, largely because the market is small and easily moved by supply-and-demand dynamics.
Physical Palladium Shares ETF
ETF options for investing in palladium are relatively limited, but the Aberdeen Standard Physical Palladium Shares ETF (PALL) is perhaps the largest. As of March 31, 2020, the fund held more than 131,500 troy ounces at a secured vault in London.
PALL fund may be the purest palladium play given that its prices derive directly from the London Platinum and Palladium Market, a major trading center for platinum-group metals. The fund was founded in December 2009 and has returned more than 17% annually since its inception. The annual expense ratio is 0.60%.
Sprott Physical Platinum & Palladium Trust
Like the Physical Palladium Shares ETF, the Sprott Physical Platinum & Palladium Trust (SPPP) also holds physical bullion as opposed to derivative securities. As of March 31, 2020, the ETF held more than 24,000 ounces of platinum and 44,000 ounces of palladium.
The ETF has returned 6% annually since its inception in December 2012. Trust unit holders may redeem their units for physical platinum or palladium on a monthly basis if they meet minimum redemption requirements. The fund has an annual expense ratio of 1.29%.
Physical Precious Metals Basket Shares
The Aberdeen Standard Physical Precious Metals Basket Shares ETF (GLTR) invests in a number of precious metals. As of March 31, 2020, the fund held 483 bars of gold, 372 bars of palladium, 191 bars of platinum and 7,313 bars of silver. The metals are held at a secured vault in London. The fund has been been flat since its inception in October 2010. The annual expense ratio is 0.60%.