10-Q: abrdn Palladium ETF Trust Reports Strong Q3 2025 Growth

abrdn Palladium ETF Trust reported a significant increase in net assets and NAV per share for the quarter and nine months ended September 30, 2025, driven by rising palladium prices and increased share creations.

Summary

• Net Assets increased by 20.73% to $622.1 million at September 30, 2025, from $515.3 million at June 30, 2025.
• For the nine months ended September 30, 2025, Net Assets increased by 75.71% to $622.1 million from $354.1 million at December 31, 2024.
• Net Asset Value (NAV) per Share rose 8.75% to $112.35 at September 30, 2025, from $103.31 at June 30, 2025.
• For the nine months ended September 30, 2025, NAV per Share increased 35.26% to $112.35 from $83.06 at December 31, 2024.
• The price per ounce of palladium increased by 8.91% in Q3 2025, from $1,134.00 to $1,235.00.
• For the nine months ended September 30, 2025, the price per ounce of palladium rose 35.86%, from $909.00 to $1,235.00.
• The Trust created 1,025,000 Shares (82 Baskets) and redeemed 475,000 Shares (38 Baskets) during Q3 2025.
• For the nine months ended September 30, 2025, 2,725,000 Shares (218 Baskets) were created and 1,450,000 Shares (116 Baskets) were redeemed.
• Net increase in net assets from operations was $47.3 million for Q3 2025 and $138.7 million for the nine months ended September 30, 2025.
• The Sponsor's Fee was $819,311 for Q3 2025 and $1,922,417 for the nine months ended September 30, 2025, representing an annualized rate of 0.60% of the adjusted daily net asset value.

Sentiment

Score: 8

Explanation: The Trust demonstrated strong financial performance driven by a significant increase in palladium prices and robust investor interest, leading to substantial growth in net assets and NAV per share. The operational changes implemented also appear to be positive for efficiency.

Positives

• Significant growth in Net Assets: 20.73% for the quarter and 75.71% for the nine months ended September 30, 2025.
• Strong NAV per Share appreciation: 8.75% for the quarter and 35.26% for the nine months ended September 30, 2025.
• Substantial increase in the underlying palladium price: 8.91% in Q3 2025 and 35.86% for the nine months ended September 30, 2025.
• Net increase in shares outstanding (creations exceeded redemptions), indicating healthy investor demand for the product.
• Positive change in unrealized gain on investment in palladium of $46.9 million for Q3 2025 and $165.4 million for the nine months ended September 30, 2025.

Negatives

• Realized losses on palladium distributed for the redemption of Shares amounted to $24.47 million for the nine months ended September 30, 2025.
• Realized losses on palladium transferred to pay expenses totaled $343,652 for the nine months ended September 30, 2025.
• The Sponsor's Fee increased due to the higher asset value of the Trust, reflecting higher costs for investors in absolute terms.

Risks

• Concentration of risk due to the Trust's sole business activity being investment in palladium, making it highly susceptible to fluctuations in palladium prices.
• Palladium price is influenced by global supply and demand factors, including production and cost levels in major producing countries, recycling, autocatalyst demand, industrial demand, jewelry demand, investment demand, and sales of existing stockpiles.
• The anticipated exhaustion of existing palladium stockpiles is expected to place a higher burden on new mine supply, potentially impacting future prices.
• Investors' expectations regarding inflation, currency exchange rates, and interest rates can affect palladium prices.
• Investment and trading activities of hedge funds and commodity funds can introduce volatility.
• Global or regional political, economic, or financial events and situations, including tariffs, sanctions, and other trade restrictions, could materially affect palladium prices.
• There is no assurance that palladium will maintain its long-term value in terms of purchasing power in the future.

Future Outlook

The filing primarily reports historical performance and does not provide explicit forward-looking guidance or estimates beyond the general investment objective. It states that neither the Trust nor the Sponsor is obligated to update forward-looking statements or reflect changes in management's expectations.

Management Comments

• The Sponsor believes that, for many investors, the Shares will represent a cost effective investment relative to traditional means of investing in palladium.
• Management has evaluated the possibility of subsequent events impacting the financial statements through the filing date and identified no material subsequent events requiring adjustment or disclosure.
• The Chief Executive Officer and Chief Financial Officer of the Sponsor concluded that, as of September 30, 2025, the Trust's disclosure controls and procedures were effective.
• There have been no changes that have materially affected, or are reasonably likely to materially affect, the Trust's or Sponsor's internal control over financial reporting.

Industry Context

The Trust's performance is directly correlated with the price of physical palladium, which experienced significant appreciation during the reported periods. This strong performance suggests robust demand for palladium, potentially driven by its use in autocatalysts, industrial applications, jewelry, and investment. The filing highlights that the anticipated exhaustion of existing palladium stockpiles is likely to place a higher burden on new mine supply, which could be a significant factor influencing future market dynamics and prices.

Comparison to Industry Standards

• The Trust's investment objective is to reflect the performance of the price of physical palladium, less expenses, directly benchmarking its performance against the LBMA Palladium Price.
• The NAV per Share rose slightly less than the price per ounce of palladium on a percentage basis due to the Sponsor's Fee (0.60% annualized), which is a standard characteristic of commodity ETFs and reflects the cost of holding the physical asset and administering the fund.
• The expense ratio of 0.60% is consistent across all reported periods, indicating stable operational costs relative to assets.

Corporate Governance

Related Party Transactions

• The Sponsor (abrdn ETFs Sponsor LLC) and the Trustee (The Bank of New York Mellon) are considered related parties to the Trust.
• The Sponsor pays the Trustee's monthly fee, Custodian's fee, exchange listing fees, SEC registration fees, printing and mailing costs, audit fees, and up to $100,000 per annum in legal expenses.
• The Trust pays the Sponsor's Fee through in-kind transfers of palladium.
• The Trustee, Custodian, and their affiliates may act as Authorized Participants, purchasing or selling Shares for their own account, as agents for customers, or for accounts over which they exercise investment discretion.
• The Trustee, Custodian, and their affiliates may also purchase or sell palladium directly for their own account or as agents.

Stakeholder Impact

• Shareholders: Directly impacted by the performance of palladium prices and the Trust's NAV per share. The recent strong performance has been beneficial, but they remain exposed to commodity price volatility.
• Sponsor (abrdn ETFs Sponsor LLC): Benefits from increased Net Assets as its fee is a percentage of the ANAV, leading to higher absolute fee income. Bears certain administrative and marketing expenses.
• Authorized Participants: Benefit from the creation and redemption process, which allows them to arbitrage differences between the NAV and market price of Shares, and from the reduced basket size and faster settlement period.
• Custodians (ICBC Standard Bank Plc): Provides custody services for the Trust's palladium, receiving fees paid by the Sponsor.

Next Steps

• The Trust will continue to issue and redeem Shares in Baskets (12,500 Shares per Basket) in exchange for deposits and distributions of physical palladium.
• The Trustee will continue to value the Trust's palladium daily based on the LBMA Palladium Price PM or AM, as applicable.

Key Dates

Recommendation

The abrdn Palladium ETF Trust is a passive investment vehicle designed to track the price of physical palladium. Its strong performance in Q3 2025 and year-to-date is solely attributable to the significant appreciation in palladium prices. For a seasoned investor, the recommendation is 'Hold' because the Trust's value is entirely dependent on the volatile commodity market. While recent trends are positive, the inherent risks associated with palladium price fluctuations, global supply/demand dynamics, and macroeconomic factors mean that future performance is uncertain. It is not a 'buy' based on active management or unique strategic advantages, but rather a 'hold' for investors who already have exposure or maintain a long-term bullish outlook on palladium as a commodity, acknowledging its speculative nature.

Keywords

Palladium ETF, PALL, abrdn, physical palladium, commodity ETF, precious metals, investment trust, SEC filing, 10-Q, financial report, asset management, bullion