10-K: abrdn Palladium ETF Trust Sees Strong 2025 Rebound

The abrdn Palladium ETF Trust reported a significant increase in Net Asset Value and palladium price in 2025, driven by supply constraints and waning EV subsidies.

Summary

• The abrdn Palladium ETF Trust's investment objective is for its Shares to reflect the performance of the price of physical palladium, less the Trust's expenses.
• The Trust's assets consist solely of physical palladium bullion, held by a custodian.
• In 2025, the Trust's Net Asset Value (NAV) increased by 192.46% to $1,035,462,345 from $354,057,800 at December 31, 2024.
• The price per ounce of palladium rose 72.39% in 2025, from $909.00 at December 31, 2024, to $1,567.00 at December 31, 2025.
• The NAV per Share increased by 71.36% in 2025, from $83.06 at December 31, 2024, to $142.33 at December 31, 2025.
• The increase in NAV was primarily due to an increase in outstanding shares, which rose from 4,262,500 to 7,275,000, with 4,925,000 Shares created and 1,912,000 Shares redeemed during the year.
• The palladium market in 2025 benefited from a deficit-driven, supply-constrained environment, with several mining companies reducing operations.
• Waning U.S. government support for EV subsidies (cessation of $7,500 EV tax credit in September 2025) accelerated automakers' decisions to offer more fossil fuel and hybrid vehicles, increasing demand for palladium in pollution control.
• Weaker than anticipated South African supply and recycling, along with revised market forecasts for 2025 and 2026, contributed to the sharp increase in spot price.
• The Sponsor's Fee, the Trust's only ordinary recurring expense, accrued daily at an annualized rate of 0.60% of the Adjusted Net Asset Value (ANAV) and was $3,203,228 for 2025.
• Autocatalysts accounted for nearly 80% of palladium demand in 2025, highlighting the metal's strong link to the automotive sector.
• Palladium supply is heavily concentrated in South Africa and Russia, which together accounted for over 77% of supply in 2024.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this as a strong positive report, reflecting a significant turnaround in palladium prices and the Trust's NAV, driven by favorable market dynamics in 2025. However, inherent market volatility and geopolitical risks remain.

Positives

• The Trust's Net Asset Value (NAV) increased significantly by 192.46% to $1,035,462,345 in 2025, reversing previous declines.
• The price of physical palladium experienced a strong rebound, increasing by 72.39% to $1,567.00 per ounce in 2025.
• The NAV per Share increased by 71.36% to $142.33 in 2025, reflecting the strong performance of the underlying asset.
• The market for palladium in 2025 was characterized by a deficit-driven, supply-constrained environment, which supported higher prices.
• The cessation of the $7,500 U.S. EV tax credit in September 2025 accelerated automakers' shift towards fossil fuel and hybrid vehicles, increasing demand for palladium in pollution control.
• Revised market forecasts for 2025 and 2026 contributed to a sharp increase in the spot price of palladium.
• Strong Chinese imports and tighter leasing markets also amplified the movement in spot price.

Negatives

• Palladium prices are highly volatile, as demonstrated by a 19.98% decrease in 2024 and a 36.00% decrease in 2023.
• The Trust's NAV per Share performance slightly lags the palladium price due to the recurring Sponsor's Fee (0.60% annually).
• The palladium market is heavily reliant on the automotive sector (nearly 80% of demand in 2025), making it vulnerable to industry downturns or a future widespread shift to electric vehicles.
• Palladium supply is highly concentrated in South Africa and Russia, exposing the market to geopolitical risks and operational challenges in these regions.
• Palladium held in the Trust's unallocated account and Authorized Participants' unallocated accounts is not segregated from the Custodian's assets, posing a risk in the event of the Custodian's insolvency.
• The Trust does not insure its palladium, and recourse against the Custodian is limited under English law, potentially leading to unrecoverable losses.
• Shareholders and Authorized Participants lack direct rights to assert claims against the Custodian or sub-custodians under the Custody Agreements.
• The amount of palladium represented by each Share will decrease over the life of the Trust due to fees, requiring price increases to maintain value.
• A possible short squeeze due to sudden demand for Shares exceeding supply may lead to price volatility not directly correlated to palladium's price.

Risks

• The price of palladium may be affected by the sale of ETVs tracking the palladium markets.
• Crises may motivate large-scale sales of palladium, which could decrease its price and adversely affect an investment in the Shares.
• A significant increase in palladium hedging activity by palladium producers could cause a decline in world palladium prices.
• A significant change in the attitude of speculators, investors, and central banks towards palladium could cause a decline in world palladium prices.
• A widening of interest rate differentials between the cost of money and the cost of palladium could negatively affect its price.
• A combination of rising money interest rates and low borrowing costs for palladium could improve the economics of selling palladium forward, increasing hedging and short selling.
• A decline in the global automotive industry or a shift from gasoline-powered to electric vehicles may decrease demand for palladium.
• The value of the Shares relates directly to the value of the palladium held by the Trust, and fluctuations in palladium price could materially adversely affect an investment.
• There is no assurance that palladium will maintain its long-term value in terms of purchasing power.
• The Trust, as it grows, may have an impact on the supply and demand of palladium that could affect Share prices.
• Unanticipated operational or trading problems could have a material adverse effect on an investment in the Shares.
• Discrepancies, disruptions, or unreliability of the LBMA Price PM could impact the value of the Trust's palladium and the market price of the Shares.
• If the process of creation and redemption of Baskets encounters unanticipated difficulties, arbitrage opportunities may not exist, and the price of Shares may fall.
• A possible short squeeze due to a sudden increase in demand for Shares that largely exceeds supply may lead to price volatility.
• The liquidity of the Shares may be affected by the withdrawal from participation of one or more Authorized Participants.
• Shareholders do not have the protections associated with ownership of shares in an investment company registered under the Investment Company Act of 1940 or the protections afforded by the CEA.
• The Trust may be required to terminate and liquidate at a time that is disadvantageous to Shareholders.
• The lack of an active trading market for the Shares may result in losses on investment at the time of disposition.
• Shareholders do not have the rights enjoyed by investors in certain other vehicles, such as voting rights or the right to bring derivative actions.
• An investment in the Shares may be adversely affected by competition from other methods of investing in palladium.
• The amount of palladium represented by each Share will decrease over the life of the Trust due to recurring deliveries of palladium to pay the Sponsor's Fee and potential sales for other expenses.
• An increase in Trust expenses not assumed by the Sponsor, or unexpected liabilities, will require larger palladium sales, resulting in a more rapid decrease in the amount of palladium per Share.
• The sale of the Trust's palladium to pay expenses at a time of low palladium prices could adversely affect the value of the Shares.
• The value of the Shares will be adversely affected if the Trust is required to indemnify the Sponsor or the Trustee under the Trust Agreement.
• The Shares may trade at a price which is at, above, or below the NAV per Share, and any discount or premium may widen due to non-concurrent trading hours.
• Purchasing activity in the palladium market associated with Basket creations or selling activity following Basket redemptions may affect the price of palladium and Share trading prices.
• The Trust's palladium may be subject to loss, damage, theft, or restriction on access.
• The Trust's lack of insurance protection and the Shareholders' limited rights of legal recourse against the Trust, Trustee, Sponsor, Custodian, and any sub-custodian exposes the Trust and its Shareholders to the risk of loss.
• The Custodian's limited liability under the Custody Agreements and English law may impair the ability of the Trust to recover losses.
• The obligations of the Custodian are governed by English law, which may frustrate the Trust in attempting to seek legal redress.
• The Trust may not have adequate sources of recovery if its palladium is lost, damaged, stolen, or destroyed.
• Shareholders and Authorized Participants lack the right under the Custody Agreements to assert claims directly against the Custodian and any sub-custodian.
• Failure by sub-custodians to exercise due care in the safekeeping of the Trust's palladium could result in a loss to the Trust.
• The obligations of any sub-custodian are not determined by contractual arrangements but by LPPM rules and London palladium market customs, which may prevent recovery of damages.
• Palladium bullion allocated to the Trust may not meet London Good Delivery Standards, potentially causing a loss.
• Palladium held in unallocated accounts will not be segregated from the Custodian's assets, posing a risk in the event of insolvency.
• In issuing Baskets, the Trustee relies on information from the Custodian which is subject to confirmation, potentially leading to incorrect palladium amounts.
• The Trust relies on the information and technology systems of its service providers, which could be adversely affected by cybersecurity attacks or other disruptions.
• War, major terrorist attacks, geopolitical events (e.g., Russia-Ukraine conflict), and public health emergencies may cause volatility in palladium prices and disrupt operations.
• Potential conflicts of interest may arise among the Sponsor or its affiliates and the Trust.

Future Outlook

The Trust undertakes no obligation to publicly release any revisions to forward-looking statements. The LBMA intends to appoint ICE Benchmark Administration (IBA) to replace the LME as the third-party administrator of the LBMA Palladium prices in mid-2026. Revised market forecasts for 2025 and 2026 contributed to a sharp increase in the spot price of palladium in 2025.

Management Comments

• "We remind readers that forward-looking statements are merely predictions and therefore inherently subject to uncertainties and other factors and involve known and unknown risks that could cause the actual results, performance, levels of activity, or our achievements, or industry results, to be materially different from any future results, performance, levels of activity, or our achievements expressed or implied by such forward-looking statements."
• "Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof."
• "The Trust undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events."
• "The Sponsor believes that investors will be able to more effectively implement strategic and tactical asset allocation strategies that use palladium bullion by using the Shares instead of using the traditional means of purchasing, trading and holding palladium bullion and for many investors, transaction costs related to the Shares will be lower than those associated with the purchase, storage and insurance of physical palladium bullion."
• "The Sponsor has exercised its right to visit the Custodian in order to examine the palladium and the records maintained by the Custodian. Inspections were conducted by Bureau Veritas Commodities UK Ltd, a leading commodity inspection and testing company retained by the Sponsor, as of August 4, 2025 and January 5, 2026."
• "The Chief Executive Officer and Chief Financial Officer of the Sponsor assessed the effectiveness of the Trusts internal control over financial reporting as of December 31, 2025... concluded that the Trust maintained effective internal control over financial reporting as of December 31, 2025."

Industry Context

StockSavvy.ai notes that the palladium market is highly concentrated in terms of supply (South Africa and Russia accounting for over 77% in 2024) and demand (autocatalysts representing nearly 80% in 2025). The significant price rebound in 2025, driven by supply constraints and a shift away from EVs due to waning subsidies, highlights the metal's sensitivity to both supply-side disruptions and policy changes impacting the automotive sector. The ongoing geopolitical tensions, particularly concerning Russia, remain a critical factor influencing supply stability and market sentiment.

Comparison to Industry Standards

• The Trust's expense ratio of 0.60% is a standard fee for physically-backed commodity ETFs, comparable to other precious metal ETFs like some gold or silver funds, aiming to provide a cost-effective alternative to direct physical ownership.
• The reliance on LBMA Palladium Price PM for valuation is a global benchmark, ensuring transparency and alignment with institutional market practices, similar to how other precious metal ETFs use LBMA Gold or Platinum prices.
• The shift in automotive demand from EVs back towards fossil fuel and hybrid vehicles, as noted in the filing, contrasts with the broader industry trend of increasing EV adoption, suggesting a potential short-term tailwind for palladium demand that may diverge from long-term automotive sector decarbonization goals.

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 Trustee, the Custodian (ICBC Standard Bank Plc), and their affiliates may act as Authorized Participants or purchase/sell palladium or Shares for their own account or as agents for their customers.
• The Trustee's and Custodian's fees and expenses under the Custody Agreements are paid by the Sponsor and are not separate expenses of the Trust.

Stakeholder Impact

• Shareholders: Directly impacted by the significant increase in palladium price and NAV in 2025, benefiting from the market rebound. Also bear the impact of the Sponsor's Fee and inherent market volatility.
• Authorized Participants: Continue to facilitate creation and redemption of Baskets, earning transaction fees. Their participation is crucial for the liquidity and price efficiency of the Shares.
• Sponsor (abrdn ETFs Sponsor LLC): Benefits from increased assets under management due to the higher NAV, leading to a higher Sponsor's Fee ($3,203,228 in 2025). Assumes most administrative and marketing expenses.
• Trustee (The Bank of New York Mellon): Continues to administer the Trust, value assets, and process transactions, with its fees paid by the Sponsor.
• Custodian (ICBC Standard Bank Plc): Responsible for the safekeeping of the Trust's palladium, with its fees paid by the Sponsor. The change from JPMorgan Chase Bank N.A. impacts operational relationships.
• Automotive Industry: The primary driver of palladium demand, with waning EV subsidies in the U.S. leading to increased demand for palladium in internal combustion engine and hybrid vehicles, positively impacting the market.
• Palladium Producers: Benefit from higher palladium prices, though supply from key regions like South Africa and Russia remains a critical factor influenced by operational challenges and geopolitical events.

Next Steps

• The LBMA intends to appoint ICE Benchmark Administration (IBA) to replace the LME as the third-party administrator of the LBMA Palladium prices in mid-2026.
• The Trust undertakes no obligation to publicly release any revisions to forward-looking statements.

Key Dates

Recommendation

The abrdn Palladium ETF Trust experienced a substantial rebound in 2025, with palladium prices surging over 72% and the Trust's NAV increasing by 192%. This strong performance was driven by a supply-constrained market, reduced mining output, and a favorable shift in automotive demand due to waning EV subsidies. While palladium remains subject to volatility and geopolitical risks, the current deficit-driven environment and positive market forecasts for 2025 and 2026 suggest continued upward price momentum. Investors seeking exposure to physical palladium, particularly given the current market dynamics and the Trust's efficient structure, should consider a "buy" recommendation.

Keywords

Palladium ETF, PALL, abrdn, physical palladium, precious metals, commodity ETF, investment, bullion, autocatalyst, mining, supply demand, SEC filing, 10-K, financial report, ETF Trust