For the first two new ETFs of 2010, the names pretty much say it all: ETFS Physical Platinum Shares (PPLT) and ETFS Physical Palladium Shares (PALL). The new funds started trading today (1/8/10) and come from ETF Securities Ltd (ETFS), one of the world’s leading providers of Exchange Traded Products (ETPs). The firm started listing its products in the US last year with the introductions of ETFS Silver Trust (SIVR) in July and ETFS Physical Swiss Gold Shares (SGOL) in September.
PPLT and PALL are the first Platinum Group Metal products to be launched in the US ETF market and offered to US investors. Each Trust will custody all of its physical platinum and palladium in plate and ingot form in a secure London Platinum Palladium Market approved vault which meets “good delivery standards”.
The objective of PPLT is to reflect the performance of the price of Platinum, less the Trust’s expenses. The objective of PALL is to reflect the performance of the price of Palladium, less the Trust’s expenses. Each Trust is open ended and is designed for investors who want a cost-effective and convenient way to invest in these metals as well as diversify their precious metal holdings. Both products have an expense ratio of 0.60% per annum.
PPLT has competition from E-TRACS CMCI Long Platinum TR ETN (PTM) and iPath DJ-UBS Platinum ETN (PGM). Both are exchange traded notes (ETNs) and have the stigma associated with ETNs. Therefore, I believe PPLT will win out over the existing products. PALL currently does not have any exchange traded product competition.
Many analysts believe the introduction of these products will drive up the demand, and therefore the price, of the underlying metals. If so, they could end up creating their own momentum. Only time will tell.
Disclosure covering writer, editor, publisher, and affiliates: No positions in any of the securities mentioned. No positions in any of the companies or ETF sponsors mentioned. No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.