Platinum, Palladium ETFs Launch Today

January 08, 2010

 

The eagerly awaited physically backed platinum and palladium exchange-traded funds are scheduled to launch today on the New York Stock Exchange. The new funds, from ETF Securities, will function similarly to the popular SPDR Gold Shares (NYSEArca: GLD) ETF, holding physical metal in a vault as their only asset. They will be the first physical platinum and palladium ETFs available in the
U.S.

The new funds are:

  • ETFS Physical Platinum Shares (NYSEArca: PPLT)
  • ETFS Physical Palladium Shares (NYSEArca: PALL)

The funds will charge 0.60 percent in annual expenses, a high fee for physically backed ETFs. Most other physical funds including GLD charge between 0.30 percent and 0.40 percent.

These are the third and fourth ETFs launched in the
U.S.
by ETF Securities, joining the ETFS Physical Swiss Gold Shares (NYSEArca: SGOL) and ETFS Physical Silver Shares (NYSEArca: SIVR). Combined, those two ETFs had $492 million in assets on Dec. 31, 2009. In
Europe, ETF Securities is a major player in commodity ETFs, with more than 180 funds and $16 billion in assets under management.

Investors and commodity experts are eager to see if physical investment demand stemming from these new ETFs will impact the price of the underlying metals. The platinum and palladium markets are relatively small, and if significant assets came into the funds, it could impact pricing. Expectations of such a move have driven prices for platinum- and palladium-producing equities higher in recent weeks, as reported here.

 

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