The increasing demand for rare earth metal palladium in automotive and industrial use amid supply constraints pushed palladium to its all-time price high of $2909.30 per ounce on April 26. A decreasing gold-palladium ratio over the past few weeks signifies that palladium is trading better than gold.

Prices of palladium have risen  by more than 23% since Russia’s Nornickel, the world’s largest producer of palladium and high-grade nickel, partly suspended operations at two of its mines on February 24. Also, the rising interest in and policy support for the production of fuel-efficient and low emission cars is expected to drive demand for palladium even more in the future.

Given this backdrop, we think Aberdeen Standard Physical Palladium Shares ETF (PALL - Get Rating) and Sprott Physical Platinum and Palladium Trust (SPPP - Get Rating) are well positioned to deliver solid returns.

Aberdeen Standard Physical Palladium Shares ETF (PALL - Get Rating)

PALL seeks to reflect the performance of the price of palladium. The fund is designed for investors who want a cost-effective and convenient way to invest in palladium with minimal credit risk. PALL has $477.50 million in assets under management (AUM).

PALL has a 0.60%  expense ratio, which is higher than the 0.49% category average. The ETF has gained 42.6% over the past year and 30.6% over the past nine months. The ETF’s net inflows have totaled  $32.24 million over the past month.

PALL’s POWR Ratings reflect this promising outlook. The ETF has an overall A grade, which equates to Strong Buy rating in our proprietary ratings system. PALL also has an A for Trade Grade, Buy & Hold Grade and Peer Grade. Among  36 ETFs in the Precious Metals ETFs group, PALL is ranked #3.

Sprott Physical Platinum and Palladium Trust (SPPP - Get Rating)

SPPP is a closed-end trust that invests and holds substantially all its assets in Good Delivery physical platinum and palladium bullion. The fund intends to invest in long-term holdings of unencumbered, fully allocated, physical platinum and palladium bullion and will not speculate regarding short-term changes in platinum and palladium prices. The fund has approximately $164.77 million AUM.

SPPP has a 0.50%  expense ratio of 0.50%, which is higher than the 0.49% category average. The fund has gained 50.3% over the past year and 29.3% over the past nine months. The fund’s net inflow has amounted to $80.62 million over the past month.

SPPP’s strong fundamentals are reflected in its POWR Ratings. The fund has an overall A grade, which equates to Strong Buy rating in our proprietary ratings system. SPPP also has an A for Trade Grade, Buy & Hold Grade, and Peer Grade. It is ranked #4 in the same group.

PALL shares were unchanged in after-hours trading Tuesday. Year-to-date, PALL has gained 20.15%, versus a 12.04% rise in the benchmark S&P 500 index during the same period.

About the Author: Sweta Vijayan

Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market. More...

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