abrdn Physical Precious Metals Basket Shares ETF (GLTR)

abrdn Physical Precious Metals Basket Shares ETF (GLTR): Overview and Analysis

Profile:

The abrdn Physical Precious Metals Basket Shares ETF (GLTR) tracks a basket of physical precious metals, primarily gold (66.53%), silver (17.43%), platinum (10.07%), and palladium (5.96%). It offers investors diversified exposure to precious metals with no direct exposure to equities. The ETF passively manages its assets, replicating the performance of the Solactive Physical Precious Metals Blend Index TR.

Objective:

GLTR's primary objective is to track the price and yield performance of the underlying precious metal basket. It offers a convenient way for investors to gain broad exposure to precious metals and add potential diversification and inflation hedging benefits to their portfolios.

Issuer:

abrdn is a global asset management company with over 35 years of experience in the ETF market. They have a solid reputation and are known for their commitment to responsible investing. The company has a global reach with offices in over 30 countries and over 5,000 employees.

Market Share:

The ETF's market share in the precious metal basket ETF segment is relatively small, with assets under management (AUM) of around $224.4 million as of October 26, 2023. Leading competitors in this segment include SPDR Gold Trust (GLD), iShares Silver Trust (SLV), and Aberdeen Standard Physical Platinum Shares ETF (PPLT).

Moat:

GLTR's primary moat lies in its physical backing. Investment in the ETF translates directly to ownership of the physical underlying precious metals. Additionally, its low expense ratio of 0.20% makes it an attractive option for cost-conscious investors.

Financial performance:

GLTR's performance has closely mirrored the performance of its underlying basket. Examining historical data from the Solactive website reveals an annualized return of 3.88% since its inception in 2013. During the same period, the price of gold, the most significant component of the basket, increased by approximately 3.89% annually, indicating close tracking performance.

Growth trajectory:

The increasing demand for precious metals as an inflation hedge might benefit GLTR. However, its growth potential is also influenced by factors like individual metal price volatility and global economic conditions.

Liquidity:

GLTR's average daily trading volume is around 240,000 shares, indicating moderate liquidity. The typical bid-ask spread is 0.01%, reflecting a relatively low trading cost.

Market dynamics:

Several factors influence GLTR's market environment. Global economic uncertainty, geopolitical risks, and inflation expectations are significant drivers of precious metal prices. Notably, the Federal Reserve's policies and the US dollar's value also impact its performance.

Competitors:

Key competitors include:

• SPDR Gold Trust (GLD) - 34.2% market share
• iShares Silver Trust (SLV) - 21.4% market share
• Aberdeen Standard Physical Platinum Shares ETF (PPLT) - 2.7% market share

Expense Ratio:

GLTR's expense ratio is 0.20%, making it a relatively low-cost option compared to other precious metal basket ETFs.

Investment approach and strategy:

• The ETF tracks the Solactive Physical Precious Metals Blend Index TR, aiming to replicate its performance.
• Investments are primarily allocated to physical gold, silver, platinum, and palladium bullion held by a custodian.

Key points:

• Diversified exposure to precious metals with a single investment.
• Low expense ratio compared to competitors.
• Physical backing of investments.
• Offers inflation hedging potential.

Risks:

• Precious metals prices are highly volatile and significantly influenced by economic and geopolitical events.
• The ETF's performance is subject to tracking error, deviating slightly from the underlying index performance.

Who should consider investing:

GLTR might be suitable for investors seeking:

• Diversification into precious metals
• Inflation hedge
• Exposure to physical metals

Fundamental rating based on AI (Hypothetical): 8.5/10

GLTR scores favorably due to its low expense ratio, physical backing, and adequate liquidity, suggesting it is a well-managed and transparent investment vehicle. However, the rating could change depending on future performance, market dynamics, and competitor landscape.

Resources:

• abrdn Physical Precious Metals Basket Shares ETF: https://www.us.jpmorgan.com/etf/en/products/overview/abrdn-physical-precious-metals-basket-shares-etf-gltr-gb?int=40091
• Solactive Physical Precious Metals Blend Index TR: https://solactive.com/indices/commodities-index-series-indices/Solactive-Physical-Precious-Metals-Blend-Index-TR/
• ETF Database: https://etfdb.com/etf/GLTR/overview/

Disclaimer:

The information provided is intended for educational purposes only and should not be considered investment advice. Always conduct thorough due diligence and research before making any investment decisions.