Significant growth in ETF market has come from metal backed ETFs. While everyone searches for gold, silver and copper another important metals the one that has yet to gain more exposure is palladium. There is currently one ETF purely focusing on palladium, ETFS Physical Palladium Shares ETF (PALL). The launch of this ETF was considered a challenge because global supplies of palladium are small. The annual production is only about 8 million ounces. In December 2009 the launch of PALL was hoarded with much risk because of the state of palladium.
PALL is a physically backed ETF as it buys and stores palladium in secure vaults. The objective of PALL is to reflect the performance of palladium prices. The metal entitlement of each share is 0.1 ounces of palladium. The highly anticipated palladium ETF has performed remarkably well in the ETF market because of the following reasons.
-Experts have predicted the coming years to be stronger for metal with high gains.
-Only in 2009 palladium prices doubled and demand grew in emerging economies like China where the potential usage of the metal was in gasoline powered vehicles.
-Based on the industrial usage of palladium like in computer, mobile phones and LCD television, the global supply of palladium in manufacturing will be highly active.
-The physically backed ETF will provide more access to the ownership of the metal.
-Experts have also predicted that the price of palladium will rise in 2013 to $1200 an ounce because of increase in demand.
The ETFS Palladium ETF was seen lower in the start of 2011 but it is still favored because of the industrial usage. The ETF holds more than $700 million in assets. It has an expense ratio of 0.60% with average trading volume of 216 million shares. The palladium ETF accounts for a significant portion of global supply. Only in October 2010 the fund held approximately 841,293 ounces of palladium which represented more than 10.4%of the world annual supply of palladium.
Palladium ETF is also important because of it being a key component of a car’s catalytic converter. It provides better option than platinum. This usage of palladium has also elevated the investment in palladium ETF as an attraction for the investors. Also through the palladium ETF investors find a secure and cost effective way to have access to palladium.
Recently another ETF has been launched that provides investors exposure to three metals that are in play including silver, platinum and palladium. It is called the ETFS Physical White Metals Basket Shares (WITE). It holds equal weights of the three metals and is a one trade solution for all three precious metals. This is also a good option for investors wanting to have a palladium ETF in their portfolio.
Physical Precious Metal Basket Shares (GLTR) is also an ETF that provides exposure to palladium with gold, silver and platinum. Although it provides small weightings of palladium with more focus on gold and silver but can be a good addition to the portfolio.