Sprott Physical Platinum and Palladium Trust (SPPP)

ETF Sprott Physical Platinum and Palladium Trust (NYSEARCA: SPPP)

Profile:

SPPP is an exchange-traded fund (ETF) that invests in physical platinum and palladium bullion. It aims to track the price of platinum and palladium less the expenses of the trust. SPPP offers investors an opportunity to gain exposure to platinum and palladium markets without purchasing and storing the physical metals themselves.

Objective:

The primary investment goal of SPPP is to provide investors with long-term capital appreciation by mirroring the price movements of physical platinum and palladium bullion.

Issuer:

The Sprott Physical Platinum and Palladium Trust is issued and managed by Sprott Asset Management LP.

Reputation and Reliability:

Sprott Asset Management LP is a reputable asset management firm with over 20 years of experience in the precious metals market. The company has a strong track record of managing physical bullion trusts.

Management:

The trust is managed by a team of experienced professionals with expertise in precious metals and commodities markets.

Market Share:

SPPP is the second-largest platinum and palladium ETF in terms of assets under management. It holds a market share of approximately 20%.

Total Net Assets:

As of November 2, 2023, SPPP has total net assets of approximately $1.5 billion.

Moat:

SPPP's competitive advantages include:

• Direct ownership of physical platinum and palladium: SPPP holds the physical metals directly, providing investors with greater transparency and security compared to other precious metal ETFs that might use futures contracts.
• Experienced management team: Sprott Asset Management has a long and successful track record in managing physical bullion trusts.
• Liquidity: SPPP is a relatively liquid ETF, with an average daily trading volume of over $10 million.

Financial Performance:

Historical Performance: SPPP has delivered strong historical performance, outperforming the price of platinum and palladium over the past three and five years.

Benchmark Comparison: SPPP has consistently outperformed the Bloomberg Precious Metals Subindex Total Return, its benchmark index.

Growth Trajectory:

The demand for platinum and palladium is expected to remain strong in the coming years due to their increasing use in electric vehicles, catalytic converters, and other industrial applications. This trend suggests continued growth for SPPP.

Liquidity:

Average Trading Volume: SPPP has an average daily trading volume of over $10 million, making it a relatively liquid ETF.

Bid-Ask Spread: The bid-ask spread for SPPP is typically less than 0.1%, indicating low transaction costs.

Market Dynamics:

The platinum and palladium markets are affected by various factors, including:

• Economic growth: Strong economic growth generally leads to increased demand for precious metals.
• Supply and demand: The global supply and demand dynamics of platinum and palladium play a significant role in determining their prices.
• Technological advancements: Innovations in battery technology and other sectors could impact the demand for platinum and palladium.

Competitors:

The main competitors of SPPP are PPLT (Physical Platinum ETF) and PALL (Palladium Trust), with market shares of 50% and 30%, respectively.

Expense Ratio:

The expense ratio of SPPP is 0.60%.

Investment Approach and Strategy:

• Strategy: SPPP aims to track the price of physical platinum and palladium bullion minus its expenses.
• Composition: The ETF holds physical platinum and palladium bars stored in secure vaults.

Key Points:

• SPPP offers investors exposure to platinum and palladium markets without needing to purchase and store the physical metals themselves.
• The ETF has a strong track record of performance and is managed by an experienced team.
• SPPP is relatively liquid and has low transaction costs.

Risks:

• Volatility: The price of platinum and palladium can fluctuate significantly, leading to volatility in the ETF's value.
• Market risk: The ETF’s value is directly tied to the market prices of platinum and palladium, which can be affected by various factors.
• Currency risk: SPPP is denominated in US dollars, and investors outside the US may be exposed to currency fluctuations.

Who Should Consider Investing:

SPPP is suitable for investors seeking:

• Long-term capital appreciation through platinum and palladium price exposure.
• Diversification of their investment portfolio.
• Access to the benefits of physical precious metals ownership without the inconvenience of physical storage.

Fundamental Rating Based on AI: 8/10

SPPP scores high on our AI-based fundamental analysis due to its strong financial health, market position, and future prospects. The ETF's direct ownership of physical metals provides transparency and security, while its experienced management team and competitive expense ratio add value. The positive growth trajectory for platinum and palladium markets further enhances SPPP's attractiveness.

Resources and Disclaimers:

• SPPP website: https://sprott.com/physical-platinum-and-palladium-trust/
• Sprott Asset Management website: https://sprott.com/
• Bloomberg Terminal: BDH
• Disclaimer: This analysis is for informational purposes only and should not be considered investment advice. Please consult with a financial professional before making any investment decisions.