10-Q: abrdn Palladium ETF Trust Reports NAV Decrease Amidst Share Redemptions in Q3 2024

abrdn Palladium ETF Trust's NAV decreased by 3.91% in Q3 2024, primarily due to share redemptions, despite a slight increase in the price of palladium.

Summary

• The abrdn Palladium ETF Trust's NAV decreased by 3.91% during the third quarter of 2024, falling from $283.97 million to $272.86 million.
• This decrease was primarily driven by a reduction in outstanding shares, with 237,500 shares created and 437,500 shares redeemed.
• The price of palladium saw a modest increase of 2.67% during the quarter, rising from $972.00 to $998.00 per ounce.
• The NAV per share increased by 2.51% from $89.09 to $91.33.
• For the nine months ended September 30, 2024, the Trust's NAV increased by 24.42% from $219.31 million to $272.86 million.
• This increase was influenced by a 12.15% decrease in the price of palladium and an increase in outstanding shares from 2,100,000 to 2,987,500.
• The NAV per share decreased by 12.54% from $104.43 to $91.33 during the nine-month period.
• The Sponsor's Fee for the quarter was $416,100, and for the nine-month period, it was $1,127,429, representing 0.60% of the Trust's ANAV on an annualized basis.
• Effective June 18, 2024, the number of shares constituting a Basket decreased from 25,000 to 12,500.

Sentiment

Score: 5

Explanation: The sentiment is neutral. While the NAV decreased during the quarter, the price of palladium saw a modest increase. The overall performance reflects the inherent volatility of the palladium market.

Positives

• The price of palladium saw a modest increase of 2.67% during the quarter, rising from $972.00 to $998.00 per ounce.
• The NAV per share increased by 2.51% from $89.09 to $91.33.
• For the nine months ended September 30, 2024, the Trust's NAV increased by 24.42% from $219.31 million to $272.86 million.
• The number of outstanding shares increased from 2,100,000 Shares at December 31, 2023 to 2,987,500 Shares at September 30, 2024.

Negatives

• The Trust's NAV decreased by 3.91% in Q3 2024, closing at $272.86 million.
• The number of outstanding shares decreased from 3,187,500 to 2,987,500 during the quarter due to redemptions.
• The price of palladium decreased by 12.15% during the nine-month period.
• The NAV per share decreased by 12.54% to $91.33 during the nine-month period.

Risks

• The Trust's performance is heavily reliant on the price of palladium, which is subject to various market factors.
• Fluctuations in global palladium supply and demand, investor expectations, currency exchange rates, and geopolitical events can significantly impact the Trust's financial position.
• There is no assurance that palladium will maintain its long-term value.
• The Trust is exposed to concentration risk as its sole business activity is investing in palladium.

Future Outlook

The Trust's future performance is tied to the price of palladium, which is influenced by various market factors. The Sponsor believes that the Shares will represent a cost-effective investment relative to traditional means of investing in palladium for many investors.

Industry Context

This report reflects the performance of a physically-backed palladium ETF, a segment of the broader commodity ETF market. The performance is directly correlated to the price of palladium, making it susceptible to the same market forces that affect the metal's price.

Comparison to Industry Standards

• Comparable palladium ETFs include the GraniteShares Palladium Trust (PALL) and the Sprott Physical Platinum and Palladium Trust (SPPP).
• The expense ratio of 0.60% is within the typical range for physically-backed commodity ETFs.
• Performance should be benchmarked against the LBMA Palladium Price PM, the standard reference price for palladium.

Management Changes

Related Party Transactions

• The Sponsor and the Trustee are considered related parties to the Trust.
• The Trustee and the Custodian and their affiliates may from time to time act as Authorized Participants and purchase or sell Shares for their own account, as agent for their customers and for accounts over which they exercise investment discretion.
• The Trustees and Custodians fees are paid by the Sponsor and are not separate expenses of the Trust.

Stakeholder Impact

• Shareholders are directly impacted by fluctuations in the price of palladium and the Trust's expenses.
• Authorized Participants are affected by the creation and redemption processes and the associated fees.
• The Sponsor benefits from the Sponsor's Fee, which is a percentage of the Trust's ANAV.

Key Dates

Keywords

palladium, ETF, abrdn, NAV, shares, redemption, Authorized Participants, LBMA Palladium Price, investment