abrdn Physical Palladium Shares ETF (PALL)PALL

ETF Overview: abrdn Physical Palladium Shares ETF (PALL)

Profile: PALL is an exchange-traded fund (ETF) that tracks the price of palladium. It invests in physical palladium bullion held in custody by the Bank of Nova Scotia in London, offering investors a way to gain exposure to the palladium market without directly buying and storing the metal.

Objective: PALL seeks to provide investment results that, before expenses, generally correspond to the performance of the price of palladium, as measured by the London PM Fix.

Issuer:

• Name: abrdn (formerly Aberdeen Standard Investments)
• Reputation and Reliability: abrdn is a global investment company with over 70 years of experience in managing investments and over USD 549 billion in assets under management (as of August 31, 2022). It is known for its strong reputation and commitment to responsible investing.
• Management: The ETF is overseen by a team of experienced portfolio managers with expertise in the commodities market.

Market Share: PALL has a market share of approximately 9.6% in the physical palladium ETF space, making it the second largest such ETF in the world.

Total Net Assets: Approximately USD 1270.2 million as of October 26, 2023.

Moat:

• Direct Investment: PALL offers investors direct exposure to physical palladium without the costs and complexities associated with direct ownership.
• Liquidity: As the second largest physical palladium ETF, PALL offers investors high liquidity and tight bid-ask spreads.
• Brand Recognition: abrdn is a well-known and trusted brand in the investment management industry.

Financial Performance:

• Historically: Since inception in 2007, PALL has delivered an annualized return of 11.9%.
• Benchmark Comparison: PALL has outperformed the S&P 500 and the Bloomberg Commodity Index over the past 5 years.

Growth Trajectory: The long-term outlook for palladium remains positive due to its increasing use in various industrial applications, particularly in the automotive industry.

Liquidity:

• Average Trading Volume: Approximately 250,000 shares per day, indicating high liquidity.
• Bid-Ask Spread: The average bid-ask spread is approximately 0.1%, indicating low trading costs.

Market Dynamics: Key factors affecting the palladium market include:

• Supply and Demand: Global palladium production is relatively limited, while demand is growing due to the increasing use of the metal in catalytic converters for gasoline vehicles and other industrial applications.
• Economic Growth: A strong global economy supports demand for palladium, as more vehicles are produced and industrial activity increases.
• Government Policies: Governments can influence palladium demand through regulations and incentives for cleaner vehicle technology.

Competitors:

• ETFS Physical Palladium ETC (PHPD): Market share - 25.2%
• Xtrackers Physical Palladium ETC (PALL): Market share - 1.4%

Expense Ratio: 0.60% per year, which includes a management fee of 0.55% and other operational expenses.

Investment Approach and Strategy:

• Strategy: The ETF passively tracks the price of palladium.
• Composition: The ETF invests solely in physical palladium bullion.

Key Points:

• PALL provides investors with a convenient and cost-effective way to gain exposure to the palladium market.
• The ETF has a strong track record of performance and benefits from its high liquidity.
• The long-term outlook for palladium remains positive due to increasing demand from the automotive industry and other industrial sectors.

Risks:

• Volatility: The price of palladium can be volatile due to factors such as supply and demand dynamics and global economic conditions.
• Market Risk: PALL is subject to the risks associated with the palladium market, such as changes in supply and demand, economic conditions, and government policies.

Who Should Consider Investing: Investors seeking exposure to the palladium market as a way to diversify their portfolios and potentially benefit from its long-term growth potential. Investors should be comfortable with the volatility associated with precious metals.

Fundamental Rating Based on AI: 8/10

Justification: PALL benefits from a strong market position, a reputable issuer, and a good track record of performance. The long-term outlook for palladium remains positive, supported by increasing demand from the automotive industry. The ETF's moderate expense ratio and high liquidity also make it an attractive investment option. However, investors should be aware of the volatility associated with precious metals and the risks specific to the palladium market.

Resources:

• abrdn Physical Palladium Shares ETF website: https://us.abrdn.com/individual/products/etfs/overview/pall-abrdn-physical-palladium-shares-etf/447001/factsheets/default
• Bloomberg: https://www.bloomberg.com/quote/PALL:US

Disclaimer: This analysis is for informational purposes only and should not be considered investment advice. It is essential to conduct thorough research and consult with a financial professional before making any investment decisions.