10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 30, 2022

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from                                 to                                 

Commission File Number: 001-34589 

abrdn Palladium ETF Trust

(Exact name of registrant as specified in its charter)

New York	26-4733157
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

c/o abrdn ETFs Sponsor LLC
1900 Market Street, Suite 200 Philadelphia, PA (Address of principal executive offices)	19103 (Zip Code)

(844) 383-7289

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
abrdn Physical Palladium Shares ETF	PALL	NYSE Arca

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒   No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒   No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	☐	Accelerated Filer	☒
Non-Accelerated Filer	☐	Smaller Reporting Company	☐
		Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes    ☒ No

As of November 2, 2022, abrdn Palladium ETF Trust had 1,750,000 abrdn Physical Palladium Shares ETF outstanding.

abrdn Palladium ETF TRUST

FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2022

INDEX

PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	15
Item 4.	Controls and Procedures	15
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	16
Item 1A.	Risk Factors	16
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	16
Item 3.	Defaults Upon Senior Securities	16
Item 4.	Mine Safety Disclosures	16
Item 5.	Other Information	17
Item 6.	Exhibits	17
SIGNATURES		18

abrdn Palladium ETF Trust

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Statements of Assets and Liabilities

At September 30, 2022 (Unaudited) and December 31, 2021

	September 30, 2022		December 31, 2021
(Amounts in 000’s of US$, except for Share and per Share data)
ASSETS
Investment in palladium (cost: September 30, 2022: $329,322; December 31, 2021: $334,434)	$	359,056	$	358,161
Total assets		359,056		358,161
LIABILITIES
Fees payable to Sponsor		178		190
Total liabilities		178		190
NET ASSETS(1)	$	358,878	$	357,971

(1) Authorized share capital is unlimited with no par value per Share. Shares issued and outstanding at September 30, 2022 were 1,750,000 and at December 31, 2021 were 1,950,000. Net asset values per Share at September 30, 2022 and December 31, 2021 were $205.07 and $183.58, respectively.

See Notes to the Financial Statements

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abrdn Palladium ETF Trust

Schedules of Investments

At September 30, 2022 (Unaudited) and December 31, 2021

	September 30, 2022
Description	oz		Cost		Fair Value			% of Net Assets
Investment in palladium (in 000’s of US$, except for oz and percentage data)
Palladium		162,175.5	$	329,322	$	359,056			100.05	%
Total investment in palladium		162,175.5	$	329,322	$	359,056			100.05	%
Less liabilities						(178	)		(0.05	)%
Net Assets					$	358,878			100.00	%

	December 31, 2021
Description	oz		Cost		Fair Value			% of Net Assets
Investment in palladium (in 000’s of US$, except for oz and percentage data)
Palladium		181,531.1	$	334,434	$	358,161			100.05	%
Total investment in palladium		181,531.1	$	334,434	$	358,161			100.05	%
Less liabilities						(190	)		(0.05	)%
Net Assets					$	357,971			100.00	%

See Notes to the Financial Statements

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abrdn Palladium ETF Trust

Statements of Operations (Unaudited)

For the three and nine months ended September 30, 2022 and 2021

	Three Months Ended September 30, 2022			Three Months Ended September 30, 2021			Nine Months Ended September 30, 2022			Nine Months Ended September 30, 2021
(Amounts in 000’s of US$, except for Share and per Share data)
EXPENSES
Sponsor’s Fee	$	538		$	649		$	1,761		$	1,890
Total expenses		538			649			1,761			1,890
Net investment loss		(538	)		(649	)		(1,761	)		(1,890	)
REALIZED AND UNREALIZED GAINS / (LOSSES)
Realized (loss) / gain on palladium transferred to pay expenses		(6	)		236			151			704
Realized gain on palladium distributed for the redemption of Shares		575			24,682			5,320			37,389
Change in unrealized gain / (loss) on investment in palladium		54,891			(163,964	)		6,007			(120,370	)
Change in unrealized (loss) on unsettled creations or redemptions		—			(159	)		—			—
Total gain/(loss) on investment in palladium		55,460			(139,205	)		11,478			(82,277	)
Change in net assets from operations	$	54,922		$	(139,854	)	$	9,717		$	(84,167	)
Net increase / (decrease) in net assets per Share	$	30.38		$	(73.38	)	$	5.04		$	(47.33	)
Weighted average number of Shares		1,807,609			1,905,978			1,929,304			1,778,297

See Notes to the Financial Statements 

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abrdn Palladium ETF Trust

Statements of Changes in Net Assets (Unaudited)

For the three and nine months ended September 30, 2022 and 2021

	Three Months Ended September 30, 2022						Three Months Ended September 30, 2021
(Amounts in 000’s of US$, except for Share data)	Shares			Amount			Shares			Amount
Opening balance		1,900,000		$	332,771			2,000,000		$	505,269
Net investment loss					(538	)					(649	)
Realized gain on investment in palladium					569						24,918
Change in unrealized gain/(loss) on investment in palladium					54,891						(163,964	)
Change in unrealized (loss) on unsettled creations or redemptions					—						(159	)
Creations		—			—			200,000			45,144
Redemptions		(150,000	)		(28,815	)		(350,000	)		(83,187	)
Closing balance		1,750,000		$	358,878			1,850,000		$	327,372

	Nine Months Ended September 30, 2022						Nine Months Ended September 30, 2021
(Amounts in 000’s of US$, except for Share data)	Shares			Amount			Shares			Amount
Opening balance		1,950,000		$	357,971			1,625,000		$	356,238
Net investment loss					(1,761	)					(1,890	)
Realized gain on investment in palladium					5,471						38,093
Change in unrealized gain/(loss) on investment in palladium					6,007						(120,370	)
Creations		425,000			112,111			700,000			169,308
Redemptions		(625,000	)		(120,921	)		(475,000	)		(114,007	)
Closing balance		1,750,000		$	358,878			1,850,000		$	327,372

See Notes to the Financial Statements

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abrdn Palladium ETF Trust

Financial Highlights (Unaudited)

For the three and nine months ended September 30, 2022 and 2021

	Three Months Ended September 30, 2022			Three Months Ended September 30, 2021			Nine Months Ended September 30, 2022			Nine Months Ended September 30, 2021
Per Share Performance (for a Share outstanding throughout the entire period)
Net asset value per Share at beginning of period	$	175.14		$	252.63		$	183.58		$	219.22
Income from investment operations:
Net investment loss		(0.30	)		(0.34	)		(0.91	)		(1.06	)
Total realized and unrealized gains or losses on investment in palladium		30.23			(75.33	)		22.40			(41.20	)
Change in net assets from operations		29.93			(75.67	)		21.49			(42.26	)
Net asset value per Share at end of period	$	205.07		$	176.96		$	205.07		$	176.96
Weighted average number of Shares		1,807,609			1,905,978			1,929,304			1,778,297
Expense ratio(1)		0.60	%		0.60	%		0.60	%		0.60	%
Net investment loss ratio(1)		(0.60	)%		(0.60	)%		(0.60	)%		(0.60	)%
Total return, net asset value(2)		17.09	%		(29.95	)%		11.71	%		(19.28	)%

(1)	Annualized for periods less than one year.
(2)	Total return is not annualized.

See Notes to the Financial Statements

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abrdn Palladium ETF Trust

Notes to the Financial Statements (Unaudited)

1.    Organization

The abrdn Palladium ETF Trust (known as Aberdeen Standard Palladium ETF Trust prior to March 31, 2022) (the “Trust”) is a common law trust formed on December 30, 2009 under New York law pursuant to a depositary trust agreement (the “Trust Agreement”) executed by abrdn ETFs Sponsor LLC (known as Aberdeen Standard Investments ETFs Sponsor LLC prior to March 1, 2022) (the “Sponsor”) and The Bank of New York Mellon as Trustee (the “Trustee”). The Trust holds palladium bullion and issues abrdn Physical Palladium Shares ETF (known as Aberdeen Standard Physical Palladium Shares ETF prior to March 31, 2022) (“Shares”) in minimum blocks of 25,000 Shares (also referred to as “Baskets”) in exchange for deposits of palladium and distributes palladium in connection with the redemption of Baskets. Shares represent units of fractional undivided beneficial interest in and ownership of the Trust which are issued by the Trust. The Sponsor is a Delaware limited liability company and a wholly-owned subsidiary of abrdn Inc. (known as Aberdeen Standard Investments Inc. prior to January 1, 2022). abrdn Inc. is a wholly-owned indirect subsidiary of abrdn (formerly known as Standard Life Aberdeen) plc. The Trust is governed by the Trust Agreement.

The investment objective of the Trust is for the Shares to reflect the performance of the price of palladium, less the Trust’s expenses and liabilities. The Trust is designed to provide an individual owner of beneficial interests in the Shares (a “Shareholder”) an opportunity to participate in the palladium market through an investment in securities. The fiscal year end for the Trust is December 31.

The accompanying financial statements were prepared in accordance with the accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions for Form 10-Q. In the opinion of the Trust’s management, all adjustments (which consist of normal recurring adjustments) necessary to present fairly the financial position and results of operations as of September 30, 2022, and for the three and nine month periods then ended have been made.

These financial statements should be read in conjunction with the Trust’s Annual Report on Form 10-K and Form 10-K/A for the fiscal year ended December 31, 2021. The results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of the operating results for the full year.

2.    Significant Accounting Policies

The preparation of financial statements in accordance with U.S. GAAP requires those responsible for preparing financial statements to make estimates and assumptions that affect the reported amounts and disclosures. Actual results could differ from those estimates. The following is a summary of significant accounting policies followed by the Trust. 

2.1.    Basis of Accounting 

The Sponsor has determined that the Trust falls within the scope of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 946, Financial Services—Investment Companies, and has concluded that for reporting purposes, the Trust is classified as an Investment Company. The Trust is not registered as an investment company under the Investment Company Act of 1940 and is not required to register under such act.

2.2.    Valuation of Palladium

The Trust follows the provisions of ASC 820, Fair Value Measurement (“ASC 820”). ASC 820 provides guidance for determining fair value and requires increased disclosure regarding the inputs to valuation techniques used to measure fair value. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. 

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abrdn Palladium ETF Trust

Notes to the Financial Statements (Unaudited)

The Trust’s palladium is held by JPMorgan Chase Bank, N.A. (the “Custodian”), on behalf of the Trust, at its London, England vaulting premises. The Trust’s palladium may also be held by UBS AG, or any other firm selected by the Custodian to hold the Trust’s palladium in the Trust’s allocated account in the firm’s vault premises on a segregated basis and whose appointment has been approved by the Sponsor. At September 30, 2022, approximately 28.14% of the Trust’s palladium was held by one or more sub-custodians.

The Trust’s palladium is recorded at fair value. The cost of palladium is determined according to the average cost method and the fair value is based on the afternoon session of the twice daily fix of an ounce of palladium administered by the London Metal Exchange (“LME”) (the “LME PM Fix”). Realized gains and losses on transfers of palladium, or palladium distributed for the redemption of Shares, are calculated on a trade date basis as the difference between the fair value and average cost of palladium transferred.

The LME is responsible for the administration of the electronic palladium price fixing system (“LMEbullion”) that replicates electronically the manual London palladium fix processes previously employed by the London Platinum and Palladium Fixing Company Ltd (“LPPFCL”), as well as providing electronic market clearing processes for palladium bullion transactions at the fixed prices established by the LME pricing mechanism. LMEbullion, like the previous London palladium fix processes, establishes and publishes fixed prices for troy ounces of palladium twice each London trading day during fixing sessions beginning at 9:45 a.m. London time (the” LME AM Fix”) and 2:00 p.m. London time (the “LME PM Fix”).

Once the value of  palladium has been determined, the net asset value (the “NAV”) is computed by the Trustee by deducting all accrued fees, expenses and other liabilities of the Trust, including the remuneration due to the Sponsor (the “Sponsor’s Fee”), from the fair value of the palladium and all other assets held by the Trust.

The Trust recognizes changes in fair value of the investment in palladium as changes in unrealized gains or losses on investment in palladium through the Statement of Operations.

The per Share amount of palladium exchanged for a purchase or redemption is calculated daily by the Trustee using the LME PM Fix to calculate the palladium amount in respect of any liabilities for which covering palladium sales have not yet been made, and represents the per Share amount of palladium held by the Trust, after giving effect to its liabilities, to cover expenses and liabilities and any losses that may have occurred.

Fair Value Hierarchy

ASC 820 establishes a hierarchy that prioritizes inputs to valuation techniques used to measure fair value. The three levels of inputs are as follows:

– Level 1. Unadjusted quoted prices in active markets for identical assets or liabilities that the Trust has the ability to access.

– Level 2. Observable inputs other than quoted prices included in level 1 that are observable for the asset or liability either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments and similar data.

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abrdn Palladium ETF Trust

Notes to the Financial Statements (Unaudited)

– Level 3. Unobservable inputs for the asset or liability to the extent that relevant observable inputs are not available, representing the Trust’s own assumptions about the assumptions that a market participant would use in valuing the asset or liability, and that would be based on the best information available.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in level 3.

The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

The Trust’s investment in palladium is classified as a level 1 asset, as its value is calculated using unadjusted quoted prices from primary market sources.

The categorization of the Trust’s assets is as shown below:

(Amounts in 000’s of US$)	September 30, 2022		December 31, 2021
Level 1
Investment in palladium	$	359,056	$	358,161

There were no transfers between levels during the nine months ended September 30, 2022 or the year ended December 31, 2021.

2.3.    Palladium Receivable and Payable

Palladium receivable or payable represents the quantity of palladium covered by contractually binding orders for the creation or redemption of Shares respectively, where the palladium has not yet been transferred to or from the Trust’s account. Generally, ownership of palladium is transferred within two business days of the trade date. At September 30, 2022, the Trust had no palladium receivable or payable for the creation or redemption of Shares. At December 31, 2021, the Trust had no palladium receivable or payable for the creation or redemption of Shares.

2.4.    Creations and Redemptions of Shares

The Trust expects to create and redeem Shares from time to time, but only in one or more Baskets (a Basket equals a block of 25,000 Shares). The Trust issues Shares in Baskets to Authorized Participants on an ongoing basis. Individual investors cannot purchase or redeem Shares in direct transactions with the Trust. An Authorized Participant is a person who (1) is a registered broker-dealer or other securities market participant such as a bank or other financial institution which is not required to register as a broker-dealer to engage in securities transactions; (2) is a participant in The Depository Trust Company; (3) has entered into an Authorized Participant Agreement with the Trustee and the Sponsor; and (4) has established an Authorized Participant Unallocated Account with the Trust’s Custodian or other palladium bullion clearing bank. An Authorized Participant Agreement is an agreement entered into by each Authorized Participant, the Sponsor and the Trustee which provides the procedures for the creation and redemption of Baskets and for the delivery of the palladium required for such creations and redemptions. An Authorized Participant Unallocated Account is an unallocated palladium account, either loco London or loco Zurich, established with the Custodian or a palladium bullion clearing bank by an Authorized Participant.

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abrdn Palladium ETF Trust

Notes to the Financial Statements (Unaudited)

The creation and redemption of Baskets is only made in exchange for the delivery to the Trust or the distribution by the Trust of the amount of palladium represented by the Baskets being created or redeemed, the amount of which is based on the combined NAV of the number of Shares included in the Baskets being created or redeemed determined on the day the order to create or redeem Baskets is properly received.

Authorized Participants may, on any business day, place an order with the Trustee to create or redeem one or more Baskets. The typical settlement period for Shares is two business days. In the event of a trade date at period end, where a settlement is pending, a respective account receivable and/or payable will be recorded. When palladium is exchanged in settlement of a redemption, it is considered a sale of palladium for financial statement purposes.

The amount of palladium represented by the Baskets created or redeemed can only be settled to the nearest 1/1000th of an ounce. As a result, the value attributed to the creation or redemption of Shares may differ from the value of palladium to be delivered or distributed by the Trust. In order to ensure that the correct amount of palladium is available at all times to back the Shares, the Sponsor accepts an adjustment to its Sponsor’s Fee in the event of any shortfall or excess on each transaction. For each transaction, this amount is not more than 1/1000th of an ounce of palladium.

As the Shares of the Trust are subject to redemption at the option of Authorized Participants, the Trust has classified the outstanding Shares as Net Assets. Changes in the number of Shares outstanding are presented in the Statement of Changes in Net Assets.

2.5.    Income Taxes

The Trust is classified as a “grantor trust” for U.S. federal income tax purposes. As a result, the Trust itself will not be subject to U.S. federal income tax. Instead, the Trust’s income and expenses will “flow through” to the Shareholders, and the Trustee will report the Trust’s proceeds, income, deductions, gains, and losses to the Internal Revenue Service on that basis.

The Sponsor has evaluated whether or not there are uncertain tax positions that require financial statement recognition and has determined that no reserves for uncertain tax positions are required as of September 30, 2022 or December 31, 2021.

2.6.    Investment in Palladium

Changes in ounces of palladium and their respective values for the three and nine months ended September 30, 2022 and 2021 are set out below:

	Three Months Ended September 30, 2022			Three Months Ended September 30, 2021
(Amounts in 000’s of US$, except for ounces data)
Ounces of palladium
Opening balance		176,345.5			182,072.1
Creations		—			23,312.9
Redemptions		(13,906.7	)		(32,637.3	)
Transfers of palladium to pay expenses		(263.3	)		(269.0	)
Closing balance		162,175.5			172,478.7
Investment in palladium
Opening balance	$	332,940		$	492,870
Creations		—			57,616
Redemptions		(28,815	)		(83,187	)
Realized gain on palladium distributed for the redemption of Shares		575			24,682
Transfers of palladium to pay expenses		(529	)		(716	)
Realized (loss) / gain on palladium transferred to pay expenses		(6	)		236
Change in unrealized gain / (loss) on investment in palladium		54,891			(163,964	)
Closing balance	$	359,056		$	327,537

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abrdn Palladium ETF Trust

Notes to the Financial Statements (Unaudited)

	Nine Months Ended September 30, 2022			Nine Months Ended September 30, 2021
(Amounts in 000’s of US$, except for ounces data)
Ounces of palladium
Opening balance		181,531.1			152,187.5
Creations		39,500.4			65,351.4
Redemptions		(58,033.8	)		(44,320.8	)
Transfers of palladium to pay expenses		(822.2	)		(739.4	)
Closing balance		162,175.5			172,478.7
Investment in palladium
Opening balance	$	358,161		$	356,424
Creations		112,111			169,308
Redemptions		(120,921	)		(114,007	)
Realized gain on palladium distributed for the redemption of Shares		5,320			37,389
Transfers of palladium to pay expenses		(1,773	)		(1,911	)
Realized gain on palladium transferred to pay expenses		151			704
Change in unrealized gain / (loss) on investment in palladium		6,007			(120,370	)
Closing balance	$	359,056		$	327,537

2.7.    Expenses / Realized Gains / Losses

The primary expense of the Trust is the Sponsor’s Fee, which is paid by the Trust through in-kind transfers of palladium to the Sponsor.

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abrdn Palladium ETF Trust

Notes to the Financial Statements (Unaudited)

The Trust will transfer palladium to the Sponsor to pay the Sponsor’s Fee that accrues daily at an annualized rate equal to 0.60% of the adjusted daily net asset value (“ANAV”) of the Trust, paid monthly in arrears. 

The Sponsor has agreed to assume administrative and marketing expenses incurred by the Trust, including the Trustee’s monthly fee and out of pocket expenses, the Custodian’s fee and the reimbursement of the Custodian’s expenses, exchange listing fees, United States Securities and Exchange Commission (the “SEC”) registration fees, printing and mailing costs, audit fees and up to $100,000 per annum in legal expenses.

For the three months ended September 30, 2022 and 2021, the Sponsor’s Fee was $538,123 and $648,684, respectively. For the nine months ended September 30, 2022 and 2021, the Sponsor’s Fee was $1,761,406 and $1,889,843, respectively.  

At September 30, 2022 and at December 31, 2021, the fees payable to the Sponsor were $177,895 and $189,455, respectively.

With respect to expenses not otherwise assumed by the Sponsor, the Trustee will, at the direction of the Sponsor or in its own discretion, sell the Trust’s palladium as necessary to pay these expenses. When selling palladium to pay expenses, the Trustee will endeavor to sell the smallest amounts of palladium needed to pay these expenses in order to minimize the Trust’s holdings of assets other than palladium. Other than the Sponsor’s Fee, the Trust had no expenses during the three and nine months ended September 30, 2022 and 2021.

Unless otherwise directed by the Sponsor, when selling palladium the Trustee will endeavor to sell at the price established by the LME PM Fix. The Trustee will place orders with dealers (which may include the Custodian) through which the Trustee expects to receive the most favorable price and execution of orders. The Custodian may be the purchaser of such palladium only if the sale transaction is made at the next LME PM Fix or such other publicly available price that the Sponsor deems fair, in each case as set following the sale order. A gain or loss is recognized based on the difference between the selling price and the average cost of the palladium sold. Neither the Trustee nor the Sponsor is liable for depreciation or loss incurred by reason of any sale.

Realized gains and losses result from the transfer of palladium for Share redemptions and / or to pay expenses and are recognized on a trade date basis as the difference between the fair value and average cost of palladium transferred.

2.8.    Subsequent Events

In accordance with the provisions set forth in FASB ASC 855-10, Subsequent Events, the Trust’s management has evaluated the possibility of subsequent events impacting the Trust’s financial statements through the filing date. During this period, no material subsequent events requiring adjustment to or disclosure in the financial statements were identified. 

3.    Related Parties

The Sponsor and the Trustee are considered to be related parties to the Trust. The Trustee and the Custodian and their affiliates may from time to time act as Authorized Participants and purchase or sell Shares for their own account, as agent for their customers and for accounts over which they exercise investment discretion. In addition, the Trustee and the Custodian and their affiliates may from time to time purchase or sell palladium directly, for their own account, as agent for their customers and for accounts over which they exercise investment discretion. The Trustee’s and Custodian’s fees are paid by the Sponsor and are not separate expenses of the Trust. 

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abrdn Palladium ETF Trust

Notes to the Financial Statements (Unaudited)

4.    Concentration of Risk

The Trust’s sole business activity is the investment in palladium, and substantially all the Trust’s assets are holdings of palladium, which creates a concentration of risk associated with fluctuations in the price of palladium. Several factors could affect the price of palladium, including: (i) global palladium supply and demand, which is influenced by factors such as production and cost levels in major palladium-producing countries, recycling, autocatalyst demand, industrial demand, jewelry demand, investment demand, and sales of existing stockpiles of palladium, which have been a key source of supply and are likely to be exhausted soon, placing a higher burden on new mine supply; (ii) investors’ expectations with respect to the rate of inflation; (iii) currency exchange rates; (iv) interest rates; (v) investment and trading activities of hedge funds and commodity funds; and (vi) global or regional political, economic or financial events and situations. In addition, there is no assurance that palladium will maintain its long-term value in terms of purchasing power in the future. In the event that the price of palladium declines, the Sponsor expects the value of an investment in the Shares to decline proportionately. Each of these events could have a material effect on the Trust’s financial position and results of operations. 

5.    Indemnification

Under the Trust’s organizational documents, the Trustee (and its directors, employees and agents) and the Sponsor (and its members, managers, directors, officers, employees and affiliates) are indemnified by the Trust against any liability, cost or expense it incurs without gross negligence, bad faith, willful misconduct or willful malfeasance on its part and without reckless disregard on its part of its obligations and duties under the Trust’s organizational documents. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. 

12

abrdn Palladium ETF Trust

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 

This information should be read in conjunction with the financial statements and notes to the financial statements included in Item 1 of Part 1 of this Form 10-Q. The discussion and analysis that follows may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and within the Private Securities Litigation Reform Act of 1995, as amended. These forward-looking statements may relate to the Trust’s financial condition, operations, future performance and business. These statements can be identified by the use of the words “may”, “should”, “expect”, “plan”, “anticipate”, “believe”, “estimate”, “predict”, “potential” or similar words and phrases. These statements are based upon certain assumptions and analyses the Sponsor has made based on its perception of historical trends, current conditions and expected future developments. Neither the Trust nor the Sponsor is under a duty to update any of the forward-looking statements, to conform such statements to actual results or to reflect a change in management’s expectations or predictions.

Introduction 

The Trust is a common law trust, formed under the laws of the state of New York on December 30, 2009. The Trust is not managed like a corporation or an active investment vehicle. It does not have any officers, directors, or employees and is administered by the Trustee pursuant to the Trust Agreement. The Trust is not registered as an investment company under the Investment Company Act of 1940 and is not required to register under such act. It does not hold or trade in commodity futures contracts, nor is it a commodity pool, or subject to regulation as a commodity pool operator or a commodity trading adviser in connection with issuing Shares.

The Trust holds palladium and is expected to issue Baskets in exchange for deposits of palladium and to distribute palladium in connection with redemptions of Baskets. Shares issued by the Trust represent units of undivided beneficial interest in and ownership of the Trust. The investment objective of the Trust is for the Shares to reflect the performance of the price of palladium, less the Trust’s expenses. The Sponsor believes that, for many investors, the Shares will represent a cost effective investment relative to traditional means of investing in palladium.

The Trust issues and redeems Shares only with Authorized Participants in exchange for palladium and only in aggregations of 25,000 Shares or integral multiples thereof. A list of current Authorized Participants is available from the Sponsor or the Trustee.

Shares of the Trust trade on the New York Stock Exchange (the “NYSE”) Arca under the symbol “PALL”.

Valuation of Palladium and Computation of Net Asset Value 

On each day that the NYSE Arca is open for regular trading, as promptly as practicable after 4:00 p.m. New York time on such day (the “Evaluation Time”), the Trustee evaluates the palladium held by the Trust and determines the NAV of the Trust.

At the Evaluation Time, the Trustee values the Trust’s palladium on the basis of that day’s LME PM Fix or, if no LME PM Fix is made on such day, the next most recent LME PM Fix determined prior to the Evaluation Time will be used, unless the Sponsor determines that such price is inappropriate as a basis for evaluation. In the event the Sponsor determines that the LME PM Fix or such other publicly available price as the Sponsor may deem fairly represents the commercial value of the Trust’s palladium is not an appropriate basis for evaluation of the Trust’s palladium, it shall identify an alternative basis for such evaluation to be employed by the Trustee. Neither the Trustee nor the Sponsor shall be liable to any person for the determination that the LME PM Fix or such other publicly available price is not appropriate as a basis for evaluation of the Trust’s palladium or for any determination as to the alternative basis for such evaluation provided that such determination is made in good faith.

Once the value of the palladium has been determined, the Trustee subtracts all estimated accrued but unpaid fees (other than the fees accruing for such day on which the valuation takes place that are computed by reference to the value of the Trust or its assets), expenses and other liabilities of the Trust from the total value of the palladium and all other assets of the Trust (other than any amounts credited to the Trust’s reserve account, if established). The resulting figure is the adjusted net asset value (the “ANAV”) of the Trust. The ANAV of the Trust is used to compute the Sponsor’s Fee.

13

All fees accruing for the day on which the valuation takes place that are computed by reference to the value of the Trust or its assets are calculated using the ANAV calculated for such day. The Trustee subtracts from the ANAV the amount of accrued fees so computed for such day and the resulting figure is the NAV of the Trust. The Trustee also determines the NAV per Share by dividing the NAV of the Trust by the number of the Shares outstanding as of the close of trading on the NYSE Arca (which includes the net number of any Shares created or redeemed on such evaluation day).

The Trustee’s estimation of accrued but unpaid fees, expenses and liabilities is conclusive upon all persons interested in the Trust and no revision or correction in any computation made under the Trust Agreement will be required by reason of any difference in amounts estimated from those actually paid.

The NAV of the Trust is obtained by subtracting the Trust’s liabilities on any day from the value of the palladium owned and receivable by the Trust on that day; the NAV per Share is obtained by dividing the NAV of the Trust on a given day by the number of Shares outstanding on that day.

The Quarter Ended September 30, 2022

The Trust’s NAV increased from $332,771,584 at June 30, 2022 to $358,878,575 at September 30, 2022, a 7.85% increase for the quarter. The increase in the Trust’s NAV resulted from a increase in the price per ounce of palladium, which rose 17.27% from $1,888.00 at June 30, 2022 to $2,214.00 at September 30, 2022. There was a decrease in outstanding Shares, which fell from 1,900,000 Shares at June 30, 2022 to 1,750,000 Shares at September 30, 2022, as a result of no Shares (0 Baskets) being created and 150,000 Shares (6 Baskets) being redeemed during the quarter.

The NAV per Share increased 17.09% from $175.14 at June 30, 2022 to $205.07 at September 30, 2022. The Trust’s NAV per Share rose slightly less than the price per ounce of palladium on a percentage basis due to the Sponsor’s Fee, which was $538,123 for the quarter, or 0.60% of the Trust’s ANAV on an annualized basis.

The NAV per Share of $211.18 at August 11, 2022 was the highest during the quarter, compared with a low of $172.87 at July 15, 2022.

The increase in net assets from operations for the quarter ended September 30, 2022 was $54,921,598, resulting from a realized gain of $575,066 on palladium distributed for the redemption of Shares and a change in unrealized gain on investment in palladium of $54,890,605, offset by a realized loss of $5,950 on the transfer of palladium to pay expenses and the Sponsor’s Fee of $538,123. Other than the Sponsor’s Fee, the Trust had no expenses during the quarter ended September 30, 2022.

The Nine Months Ended September 30, 2022

The Trust’s NAV increased from $357,971,468 at December 31, 2021 to $358,878,575 at September 30, 2022, a 0.25% increase for the period. The increase in the Trust’s NAV resulted primarily from a increase in the price per ounce of palladium, which rose 12.21% from $1,973.00 at December 31, 2021 to $2,214.00 at September 30, 2022. There was a decrease in outstanding Shares, which fell from 1,950,000 Shares at December 31, 2021 to 1,750,000 Shares at September 30, 2022, as a result of 425,000 Shares (17 Baskets) being created and 625,000 Shares (25 Baskets) being redeemed.

The NAV per Share increased 11.71% from $183.58 at December 31, 2021 to $205.07 at September 30, 2022. The Trust’s NAV per Share rose slightly less than the price per ounce of palladium on a percentage basis due to the Sponsor’s Fee, which was $1,761,406 for the period, or 0.60% of the Trust’s ANAV on an annualized basis.

The NAV per Share of $280.22 at March 7, 2022 was the highest during the period, compared with a low of $167.95 at June 14, 2022.

14

The increase in net assets from operations for the period ended September 30, 2022 was $9,716,443, resulting from a realized gain of $150,527 on the transfer of palladium to pay expenses, a realized gain of $5,319,894 on palladium distributed for the redemption of Shares and a change in unrealized gain on investment in palladium of $6,007,428, offset by the Sponsor’s Fee of $1,761,406. Other than the Sponsor’s Fee, the Trust had no expenses during the period ended September 30, 2022.

Liquidity & Capital Resources 

The Trust is not aware of any trends, demands, commitments, events or uncertainties that are reasonably likely to result in material changes to its liquidity needs. In exchange for the Sponsor’s Fee, the Sponsor has agreed to assume most of the expenses incurred by the Trust. As a result, the only ordinary expense of the Trust during the period covered by this report was the Sponsor’s Fee.

The Trustee will, at the direction of the Sponsor or in its own discretion, sell the Trust’s palladium as necessary to pay the Trust’s expenses not otherwise assumed by the Sponsor. The Trustee will not sell palladium to pay the Sponsor’s Fee but will pay the Sponsor’s Fee through in-kind transfers of palladium to the Sponsor. At September 30, 2022, the Trust did not have any cash balances.

Off-Balance Sheet Arrangements  

The Trust has no off-balance sheet arrangements.

Critical Accounting Policies 

The financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements relies on estimates and assumptions that impact the Trust’s financial position and results of operations. These estimates and assumptions affect the Trust’s application of accounting policies. Refer to Note 2 to the Financial Statements for further information on accounting policies.

Item 3. Quantitative and Qualitative Disclosures About Market Risk 

Not applicable.

Item 4. Controls and Procedures 

The Trust maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Chief Executive Officer and Chief Financial Officer of the Sponsor, and to the audit committee, as appropriate, to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of the Chief Executive Officer and the Chief Financial Officer of the Sponsor, the Sponsor conducted an evaluation of the Trust’s disclosure controls and procedures, as defined under Exchange Act Rules 13a-15(e) and 15d-15(e). Based on this evaluation, the Chief Executive Officer and the Chief Financial Officer of the Sponsor concluded that, as of September 30, 2022, the Trust’s disclosure controls and procedures were effective.

There have been no changes in the Trust’s or Sponsor’s internal control over financial reporting during the quarter ended September 30, 2022 that have materially affected, or are reasonably likely to materially affect, the Trust’s or Sponsor’s internal control over financial reporting.

15

PART II. OTHER INFORMATION

Item 1. Legal Proceedings 

None.

Item 1A. Risk Factors  

Except for the risk factor set forth below, there have been no material changes to the risk factors previously disclosed in the Trust’s Annual Report on Form 10-K and Form 10-K/A for the fiscal year ended December 31, 2021.

Risks Related to Palladium 

On April 8, 2022, in response to Russia’s invasion of Ukraine, LPPM suspended two government-owned Russian platinum and palladium refiners. New productions by such refiners will no longer be accepted as “Good Delivery” by the LPPM until further notice. The bars and sponges these refiners previously produced will still be considered Good Delivery, consistent with past suspensions of refiners by the LPPM. Fewer suppliers to the LPPM may lead to a lower supply of Good Delivery palladium and further volatility in the price of palladium.

General Risks 

Armed conflict can result in significant disruptions to the commodities markets and could adversely affect the price of the Shares.  

On February 24, 2022, Russia commenced an invasion of Ukraine. In response to such conflict or for other reasons, governments have imposed and may impose additional economic sanctions against Russia, certain other countries, entities and/or individuals. Economic sanctions and other similar governmental actions could, among other things, prevent or prohibit certain entities or individuals from participating in the bullion and commodities markets or otherwise impact the functioning of those markets. Such actions could affect the value of palladium held by the Fund. Sanctions could also result in countermeasures or retaliatory actions, which may impact the value of palladium. Although it is not possible to predict the impact that any sanctions and retaliatory actions may have on the Fund, such events could significantly harm the value of the Fund’s shares. 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 

Item 2(a). None. 

Item 2(b). Not applicable. 

Item 2(c). For the three months ended September 30, 2022: 

0 Baskets were created. 

6 Basket were redeemed.

Period	Total Baskets  Redeemed	Total Shares Redeemed	Average ounces of palladium per Share
July 2022	2	50,000	0.093
August 2022	2	50,000	0.093
September 2022	2	50,000	0.093
	6	150,000	0.093

Item 3. Defaults Upon Senior Securities 

None.

Item 4. Mine Safety Disclosures 

Not applicable.

16

Item 5. Other Information 

None.

Item 6. Exhibits

31.1	Chief Executive Officer’s Certificate, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Chief Financial Officer’s Certificate, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Chief Executive Officer’s Certificate, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Chief Financial Officer’s Certificate, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following financial statements from the Trust’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, formatted in Inline XBRL: (i) Statements of Assets and Liabilities, (ii) Statements of Operations, (iii) Statements of Changes in Net Assets, and (iv) Notes to the Financial Statements.
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Document
101.DEF	Inline XBRL Taxonomy Extension Definitions Document
101.LAB	Inline XBRL Taxonomy Extension Labels Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Document
104	The cover page from the Trust’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, formatted in Inline XBRL (included as Exhibit 101).

17

abrdn Palladium ETF Trust

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned in the capacities thereunto duly authorized.

	abrdn ETFs Sponsor LLC
Date: November 4, 2022	/s/ Steven Dunn*
	Steven Dunn**
	President and Chief Executive Officer
	(Principal Executive Officer)
Date: November 4, 2022	/s/ Andrea Melia*
	Andrea Melia**
	Chief Financial Officer and Treasurer
	(Principal Financial Officer and Principal Accounting Officer)

* The originally executed copy of this Certification will be maintained at the Sponsor’s offices and will be made available for inspection upon request.

** The Registrant is a trust and the persons are signing in their capacities as officers of abrdn ETFs Sponsor LLC, the Sponsor of the Registrant.

18

EX-31.1

abrdn Palladium ETF Trust 10-Q

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT
TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Steven Dunn, certify that:

1. I have reviewed this Report on Form 10-Q of abrdn Palladium ETF Trust;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 4, 2022	/s/ Steven Dunn*
	Steven Dunn**
	President and Chief Executive Officer
	(Principal Executive Officer)

* The originally executed copy of this Certification will be maintained at the Sponsor’s offices and will be made available for inspection upon request.

** The Registrant is a trust and Mr. Dunn is signing in his capacity as an officer of abrdn ETFs Sponsor LLC, the Sponsor of the Registrant.

EX-31.2

abrdn Palladium ETF Trust 10-Q

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT
TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Andrea Melia, certify that:

1. I have reviewed this Report on Form 10-Q of abrdn Palladium ETF Trust;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 4, 2022	/s/ Andrea Melia*
	Andrea Melia**
	Chief Financial Officer and Treasurer
	(Principal Financial Officer and Principal Accounting Officer)

* The originally executed copy of this Certification will be maintained at the Sponsor’s offices and will be made available for inspection upon request.

** The Registrant is a trust and Ms. Melia is signing in her capacity as an officer of abrdn ETFs Sponsor LLC, the Sponsor of the Registrant.

EX-32.1

abrdn Palladium ETF Trust 10-Q

 Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of abrdn Palladium ETF Trust (the “Registrant”) on Form 10-Q for the quarter ended September 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date: November 4, 2022	/s/ Steven Dunn*
	Steven Dunn**
	President and Chief Executive Officer
	(Principal Executive Officer)

* The original executed copy of this Certification will be maintained at the Sponsor’s offices and will be made available for inspection upon request.

** The Registrant is a trust and Mr. Dunn is signing in his capacity as an officer of abrdn ETFs Sponsor LLC, the Sponsor of the Registrant.

EX-32.2

abrdn Palladium ETF Trust 10-Q

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of abrdn Palladium ETF Trust (the “Registrant”) on Form 10-Q for the quarter ended September 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date: November 4, 2022	/s/ Andrea Melia*
	Andrea Melia**
	Chief Financial Officer and Treasurer
	(Principal Financial Officer and Principal Accounting Officer)

* The original executed copy of this Certification will be maintained at the Sponsor’s offices and will be made available for inspection upon request.

** The Registrant is a trust and Ms. Melia is signing in her capacity as an officer of abrdn ETFs Sponsor LLC, the Sponsor of the Registrant.

XML

Cover - shares	9 Months Ended
	Sep. 30, 2022	Nov. 02, 2022
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Sep. 30, 2022
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2022
Current Fiscal Year End Date	--12-31
Entity File Number	001-34589
Entity Registrant Name	abrdn Palladium ETF Trust
Entity Central Index Key	0001459862
Entity Tax Identification Number	26-4733157
Entity Incorporation, State or Country Code	NY
Entity Address, Address Line One	1900 Market Street, Suite 200
Entity Address, City or Town	Philadelphia
Entity Address, State or Province	PA
Entity Address, Postal Zip Code	19103
City Area Code	844
Local Phone Number	383-7289
Title of 12(b) Security	abrdn Physical Palladium Shares ETF
Trading Symbol	PALL
Security Exchange Name	NYSEArca
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		1,750,000

XML

Statements of Assets and Liabilities (Unaudited) - USD ($)		Sep. 30, 2022	Dec. 31, 2021
ASSETS
Investment in palladium (cost: September 30, 2022: $329,322; December 31, 2021: $334,434)		$ 359,056,000	$ 358,161,000
Total assets		359,056,000	358,161,000
LIABILITIES
Fees payable to Sponsor		177,895	189,455
Total liabilities		178,000	190,000
NET ASSETS	[1]	$ 358,878,000	$ 357,971,000

[1] Authorized share capital is unlimited with no par value per Share. Shares issued and outstanding at September 30, 2022 were 1,750,000 and at December 31, 2021 were 1,950,000. Net asset values per Share at September 30, 2022 and December 31, 2021 were $205.07 and $183.58, respectively.

XML

Statements of Assets and Liabilities (Unaudited) (Parenthetical) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2022	Dec. 31, 2021
Investment Company [Abstract]
Investment in palladium at cost	$ 329,322	$ 334,434
Common stock, shares authorized	Unlimited	Unlimited
Common stock, no par value (in dollars per share)	$ 0	$ 0
Common stock, shares issued	1,750,000	1,950,000
Common stock, shares outstanding	1,750,000	1,950,000
Net asset value per share (in dollars per share)	$ 205.07	$ 183.58

XML

Schedules of Investments (Unaudited) $ in Thousands		Sep. 30, 2022 USD ($) oz	Dec. 31, 2021 USD ($) oz
Investment in palladium | oz		162,175.5	181,531.1
Cost		$ 329,322	$ 334,434
Fair Value		$ 359,056	$ 358,161
% of Net Assets		100.05%	100.05%
Less liabilities		$ (178)	$ (190)
Less liabilities, % of Net Assets		(0.05%)	(0.05%)
Net Assets	[1]	$ 358,878	$ 357,971
Net Assets, % of Net Assets		100.00%	100.00%
Palladium Ounces
Investment in palladium | oz		162,175.5	181,531.1
Cost		$ 329,322	$ 334,434
Fair Value		$ 359,056	$ 358,161
% of Net Assets		100.05%	100.05%

[1] Authorized share capital is unlimited with no par value per Share. Shares issued and outstanding at September 30, 2022 were 1,750,000 and at December 31, 2021 were 1,950,000. Net asset values per Share at September 30, 2022 and December 31, 2021 were $205.07 and $183.58, respectively.

XML

Statements of Operations (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
EXPENSES
Sponsor’s Fee	$ 538,123	$ 648,684	$ 1,761,406	$ 1,889,843
Total expenses	538,000	649,000	1,761,000	1,890,000
Net investment loss	(538,000)	(649,000)	(1,761,000)	(1,890,000)
REALIZED AND UNREALIZED GAINS / (LOSSES)
Realized (loss) / gain on palladium transferred to pay expenses	(6,000)	236,000	151,000	704,000
Realized gain on palladium distributed for the redemption of Shares	575,000	24,682,000	5,320,000	37,389,000
Change in unrealized gain / (loss) on investment in palladium	54,891,000	(163,964,000)	6,007,000	(120,370,000)
Change in unrealized (loss) on unsettled creations or redemptions		(159,000)
Total gain/(loss) on investment in palladium	55,460,000	(139,205,000)	11,478,000	(82,277,000)
Change in net assets from operations	$ 54,922,000	$ (139,854,000)	$ 9,717,000	$ (84,167,000)
Net increase / (decrease) in net assets per Share	$ 30.38	$ (73.38)	$ 5.04	$ (47.33)
Weighted average number of Shares	1,807,609	1,905,978	1,929,304	1,778,297

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Statements of Changes in Net Assets (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Statement of Stockholders' Equity [Abstract]
Opening balance (in shares)	1,900,000	2,000,000	1,950,000	1,625,000
Opening balance	$ 332,771	$ 505,269	$ 357,971	$ 356,238
Net investment loss	(538)	(649)	(1,761)	(1,890)
Realized gain on investment in palladium	569	24,918	5,471	38,093
Change in unrealized gain/(loss) on investment in palladium	54,891	(163,964)	6,007	(120,370)
Change in unrealized (loss) on unsettled creations or redemptions		$ (159)
Creations (in shares)		200,000	425,000	700,000
Creations		$ 45,144	$ 112,111	$ 169,308
Redemptions (in shares)	(150,000)	(350,000)	(625,000)	(475,000)
Redemptions	$ (28,815)	$ (83,187)	$ (120,921)	$ (114,007)
Closing balance (in shares)	1,750,000	1,850,000	1,750,000	1,850,000
Closing balance	$ 358,878	$ 327,372	$ 358,878	$ 327,372

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Financial Highlights (Unaudited) - $ / shares		3 Months Ended		9 Months Ended
		Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Per Share Performance (for a Share outstanding throughout the entire period)
Net asset value per Share at beginning of period		$ 175.14	$ 252.63	$ 183.58	$ 219.22
Income from investment operations:
Net investment loss		(0.30)	(0.34)	(0.91)	(1.06)
Total realized and unrealized gains or losses on investment in palladium		30.23	(75.33)	22.40	(41.20)
Change in net assets from operations		29.93	(75.67)	21.49	(42.26)
Net asset value per Share at end of period		$ 205.07	$ 176.96	$ 205.07	$ 176.96
Weighted average number of Shares		1,807,609	1,905,978	1,929,304	1,778,297
Expense ratio	[1]	0.60%	0.60%	0.60%	0.60%
Net investment loss ratio	[1]	(0.60%)	(0.60%)	(0.60%)	(0.60%)
Total return, net asset value	[2]	17.09%	(29.95%)	11.71%	(19.28%)

[1] Annualized for periods less than one year.

[2] Total return is not annualized.

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Organization

9 Months Ended

Sep. 30, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization

1.    Organization

The abrdn Palladium ETF Trust (known as Aberdeen Standard Palladium ETF Trust prior to March 31, 2022) (the “Trust”) is a common law trust formed on December 30, 2009 under New York law pursuant to a depositary trust agreement (the “Trust Agreement”) executed by abrdn ETFs Sponsor LLC (known as Aberdeen Standard Investments ETFs Sponsor LLC prior to March 1, 2022) (the “Sponsor”) and The Bank of New York Mellon as Trustee (the “Trustee”). The Trust holds palladium bullion and issues abrdn Physical Palladium Shares ETF (known as Aberdeen Standard Physical Palladium Shares ETF prior to March 31, 2022) (“Shares”) in minimum blocks of 25,000 Shares (also referred to as “Baskets”) in exchange for deposits of palladium and distributes palladium in connection with the redemption of Baskets. Shares represent units of fractional undivided beneficial interest in and ownership of the Trust which are issued by the Trust. The Sponsor is a Delaware limited liability company and a wholly-owned subsidiary of abrdn Inc. (known as Aberdeen Standard Investments Inc. prior to January 1, 2022). abrdn Inc. is a wholly-owned indirect subsidiary of abrdn (formerly known as Standard Life Aberdeen) plc. The Trust is governed by the Trust Agreement.

The investment objective of the Trust is for the Shares to reflect the performance of the price of palladium, less the Trust’s expenses and liabilities. The Trust is designed to provide an individual owner of beneficial interests in the Shares (a “Shareholder”) an opportunity to participate in the palladium market through an investment in securities. The fiscal year end for the Trust is December 31.

The accompanying financial statements were prepared in accordance with the accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions for Form 10-Q. In the opinion of the Trust’s management, all adjustments (which consist of normal recurring adjustments) necessary to present fairly the financial position and results of operations as of September 30, 2022, and for the three and nine month periods then ended have been made.

These financial statements should be read in conjunction with the Trust’s Annual Report on Form 10-K and Form 10-K/A for the fiscal year ended December 31, 2021. The results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of the operating results for the full year.

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Significant Accounting Policies

9 Months Ended

Sep. 30, 2022

Accounting Policies [Abstract]

Significant Accounting Policies

2.    Significant Accounting Policies

The preparation of financial statements in accordance with U.S. GAAP requires those responsible for preparing financial statements to make estimates and assumptions that affect the reported amounts and disclosures. Actual results could differ from those estimates. The following is a summary of significant accounting policies followed by the Trust. 

2.1.    Basis of Accounting 

The Sponsor has determined that the Trust falls within the scope of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 946, Financial Services—Investment Companies, and has concluded that for reporting purposes, the Trust is classified as an Investment Company. The Trust is not registered as an investment company under the Investment Company Act of 1940 and is not required to register under such act.

2.2.    Valuation of Palladium

The Trust follows the provisions of ASC 820, Fair Value Measurement (“ASC 820”). ASC 820 provides guidance for determining fair value and requires increased disclosure regarding the inputs to valuation techniques used to measure fair value. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. 

The Trust’s palladium is held by JPMorgan Chase Bank, N.A. (the “Custodian”), on behalf of the Trust, at its London, England vaulting premises. The Trust’s palladium may also be held by UBS AG, or any other firm selected by the Custodian to hold the Trust’s palladium in the Trust’s allocated account in the firm’s vault premises on a segregated basis and whose appointment has been approved by the Sponsor. At September 30, 2022, approximately 28.14% of the Trust’s palladium was held by one or more sub-custodians.

The Trust’s palladium is recorded at fair value. The cost of palladium is determined according to the average cost method and the fair value is based on the afternoon session of the twice daily fix of an ounce of palladium administered by the London Metal Exchange (“LME”) (the “LME PM Fix”). Realized gains and losses on transfers of palladium, or palladium distributed for the redemption of Shares, are calculated on a trade date basis as the difference between the fair value and average cost of palladium transferred.

The LME is responsible for the administration of the electronic palladium price fixing system (“LMEbullion”) that replicates electronically the manual London palladium fix processes previously employed by the London Platinum and Palladium Fixing Company Ltd (“LPPFCL”), as well as providing electronic market clearing processes for palladium bullion transactions at the fixed prices established by the LME pricing mechanism. LMEbullion, like the previous London palladium fix processes, establishes and publishes fixed prices for troy ounces of palladium twice each London trading day during fixing sessions beginning at 9:45 a.m. London time (the” LME AM Fix”) and 2:00 p.m. London time (the “LME PM Fix”).

Once the value of  palladium has been determined, the net asset value (the “NAV”) is computed by the Trustee by deducting all accrued fees, expenses and other liabilities of the Trust, including the remuneration due to the Sponsor (the “Sponsor’s Fee”), from the fair value of the palladium and all other assets held by the Trust.

The Trust recognizes changes in fair value of the investment in palladium as changes in unrealized gains or losses on investment in palladium through the Statement of Operations.

The per Share amount of palladium exchanged for a purchase or redemption is calculated daily by the Trustee using the LME PM Fix to calculate the palladium amount in respect of any liabilities for which covering palladium sales have not yet been made, and represents the per Share amount of palladium held by the Trust, after giving effect to its liabilities, to cover expenses and liabilities and any losses that may have occurred.

Fair Value Hierarchy

ASC 820 establishes a hierarchy that prioritizes inputs to valuation techniques used to measure fair value. The three levels of inputs are as follows:

– Level 1. Unadjusted quoted prices in active markets for identical assets or liabilities that the Trust has the ability to access.

– Level 2. Observable inputs other than quoted prices included in level 1 that are observable for the asset or liability either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments and similar data.

– Level 3. Unobservable inputs for the asset or liability to the extent that relevant observable inputs are not available, representing the Trust’s own assumptions about the assumptions that a market participant would use in valuing the asset or liability, and that would be based on the best information available.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in level 3.

The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

The Trust’s investment in palladium is classified as a level 1 asset, as its value is calculated using unadjusted quoted prices from primary market sources.

The categorization of the Trust’s assets is as shown below:

(Amounts in 000’s of US$)	September 30, 2022		December 31, 2021
Level 1
Investment in palladium	$	359,056	$	358,161

There were no transfers between levels during the nine months ended September 30, 2022 or the year ended December 31, 2021.

2.3.    Palladium Receivable and Payable

Palladium receivable or payable represents the quantity of palladium covered by contractually binding orders for the creation or redemption of Shares respectively, where the palladium has not yet been transferred to or from the Trust’s account. Generally, ownership of palladium is transferred within two business days of the trade date. At September 30, 2022, the Trust had no palladium receivable or payable for the creation or redemption of Shares. At December 31, 2021, the Trust had no palladium receivable or payable for the creation or redemption of Shares.

2.4.    Creations and Redemptions of Shares

The Trust expects to create and redeem Shares from time to time, but only in one or more Baskets (a Basket equals a block of 25,000 Shares). The Trust issues Shares in Baskets to Authorized Participants on an ongoing basis. Individual investors cannot purchase or redeem Shares in direct transactions with the Trust. An Authorized Participant is a person who (1) is a registered broker-dealer or other securities market participant such as a bank or other financial institution which is not required to register as a broker-dealer to engage in securities transactions; (2) is a participant in The Depository Trust Company; (3) has entered into an Authorized Participant Agreement with the Trustee and the Sponsor; and (4) has established an Authorized Participant Unallocated Account with the Trust’s Custodian or other palladium bullion clearing bank. An Authorized Participant Agreement is an agreement entered into by each Authorized Participant, the Sponsor and the Trustee which provides the procedures for the creation and redemption of Baskets and for the delivery of the palladium required for such creations and redemptions. An Authorized Participant Unallocated Account is an unallocated palladium account, either loco London or loco Zurich, established with the Custodian or a palladium bullion clearing bank by an Authorized Participant.

The creation and redemption of Baskets is only made in exchange for the delivery to the Trust or the distribution by the Trust of the amount of palladium represented by the Baskets being created or redeemed, the amount of which is based on the combined NAV of the number of Shares included in the Baskets being created or redeemed determined on the day the order to create or redeem Baskets is properly received.

Authorized Participants may, on any business day, place an order with the Trustee to create or redeem one or more Baskets. The typical settlement period for Shares is two business days. In the event of a trade date at period end, where a settlement is pending, a respective account receivable and/or payable will be recorded. When palladium is exchanged in settlement of a redemption, it is considered a sale of palladium for financial statement purposes.

The amount of palladium represented by the Baskets created or redeemed can only be settled to the nearest 1/1000th of an ounce. As a result, the value attributed to the creation or redemption of Shares may differ from the value of palladium to be delivered or distributed by the Trust. In order to ensure that the correct amount of palladium is available at all times to back the Shares, the Sponsor accepts an adjustment to its Sponsor’s Fee in the event of any shortfall or excess on each transaction. For each transaction, this amount is not more than 1/1000th of an ounce of palladium.

As the Shares of the Trust are subject to redemption at the option of Authorized Participants, the Trust has classified the outstanding Shares as Net Assets. Changes in the number of Shares outstanding are presented in the Statement of Changes in Net Assets.

2.5.    Income Taxes

The Trust is classified as a “grantor trust” for U.S. federal income tax purposes. As a result, the Trust itself will not be subject to U.S. federal income tax. Instead, the Trust’s income and expenses will “flow through” to the Shareholders, and the Trustee will report the Trust’s proceeds, income, deductions, gains, and losses to the Internal Revenue Service on that basis.

The Sponsor has evaluated whether or not there are uncertain tax positions that require financial statement recognition and has determined that no reserves for uncertain tax positions are required as of September 30, 2022 or December 31, 2021.

2.6.    Investment in Palladium

Changes in ounces of palladium and their respective values for the three and nine months ended September 30, 2022 and 2021 are set out below:

	Three Months Ended September 30, 2022			Three Months Ended September 30, 2021
(Amounts in 000’s of US$, except for ounces data)
Ounces of palladium
Opening balance		176,345.5			182,072.1
Creations		—			23,312.9
Redemptions		(13,906.7	)		(32,637.3	)
Transfers of palladium to pay expenses		(263.3	)		(269.0	)
Closing balance		162,175.5			172,478.7
Investment in palladium
Opening balance	$	332,940		$	492,870
Creations		—			57,616
Redemptions		(28,815	)		(83,187	)
Realized gain on palladium distributed for the redemption of Shares		575			24,682
Transfers of palladium to pay expenses		(529	)		(716	)
Realized (loss) / gain on palladium transferred to pay expenses		(6	)		236
Change in unrealized gain / (loss) on investment in palladium		54,891			(163,964	)
Closing balance	$	359,056		$	327,537

	Nine Months Ended September 30, 2022			Nine Months Ended September 30, 2021
(Amounts in 000’s of US$, except for ounces data)
Ounces of palladium
Opening balance		181,531.1			152,187.5
Creations		39,500.4			65,351.4
Redemptions		(58,033.8	)		(44,320.8	)
Transfers of palladium to pay expenses		(822.2	)		(739.4	)
Closing balance		162,175.5			172,478.7
Investment in palladium
Opening balance	$	358,161		$	356,424
Creations		112,111			169,308
Redemptions		(120,921	)		(114,007	)
Realized gain on palladium distributed for the redemption of Shares		5,320			37,389
Transfers of palladium to pay expenses		(1,773	)		(1,911	)
Realized gain on palladium transferred to pay expenses		151			704
Change in unrealized gain / (loss) on investment in palladium		6,007			(120,370	)
Closing balance	$	359,056		$	327,537

2.7.    Expenses / Realized Gains / Losses

The primary expense of the Trust is the Sponsor’s Fee, which is paid by the Trust through in-kind transfers of palladium to the Sponsor.

The Trust will transfer palladium to the Sponsor to pay the Sponsor’s Fee that accrues daily at an annualized rate equal to 0.60% of the adjusted daily net asset value (“ANAV”) of the Trust, paid monthly in arrears. 

The Sponsor has agreed to assume administrative and marketing expenses incurred by the Trust, including the Trustee’s monthly fee and out of pocket expenses, the Custodian’s fee and the reimbursement of the Custodian’s expenses, exchange listing fees, United States Securities and Exchange Commission (the “SEC”) registration fees, printing and mailing costs, audit fees and up to $100,000 per annum in legal expenses.

For the three months ended September 30, 2022 and 2021, the Sponsor’s Fee was $538,123 and $648,684, respectively. For the nine months ended September 30, 2022 and 2021, the Sponsor’s Fee was $1,761,406 and $1,889,843, respectively.  

At September 30, 2022 and at December 31, 2021, the fees payable to the Sponsor were $177,895 and $189,455, respectively.

With respect to expenses not otherwise assumed by the Sponsor, the Trustee will, at the direction of the Sponsor or in its own discretion, sell the Trust’s palladium as necessary to pay these expenses. When selling palladium to pay expenses, the Trustee will endeavor to sell the smallest amounts of palladium needed to pay these expenses in order to minimize the Trust’s holdings of assets other than palladium. Other than the Sponsor’s Fee, the Trust had no expenses during the three and nine months ended September 30, 2022 and 2021.

Unless otherwise directed by the Sponsor, when selling palladium the Trustee will endeavor to sell at the price established by the LME PM Fix. The Trustee will place orders with dealers (which may include the Custodian) through which the Trustee expects to receive the most favorable price and execution of orders. The Custodian may be the purchaser of such palladium only if the sale transaction is made at the next LME PM Fix or such other publicly available price that the Sponsor deems fair, in each case as set following the sale order. A gain or loss is recognized based on the difference between the selling price and the average cost of the palladium sold. Neither the Trustee nor the Sponsor is liable for depreciation or loss incurred by reason of any sale.

Realized gains and losses result from the transfer of palladium for Share redemptions and / or to pay expenses and are recognized on a trade date basis as the difference between the fair value and average cost of palladium transferred.

2.8.    Subsequent Events

In accordance with the provisions set forth in FASB ASC 855-10, Subsequent Events, the Trust’s management has evaluated the possibility of subsequent events impacting the Trust’s financial statements through the filing date. During this period, no material subsequent events requiring adjustment to or disclosure in the financial statements were identified. 

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Related Parties

9 Months Ended

Sep. 30, 2022

Related Party Transactions [Abstract]

Related Parties

3.    Related Parties

The Sponsor and the Trustee are considered to be related parties to the Trust. The Trustee and the Custodian and their affiliates may from time to time act as Authorized Participants and purchase or sell Shares for their own account, as agent for their customers and for accounts over which they exercise investment discretion. In addition, the Trustee and the Custodian and their affiliates may from time to time purchase or sell palladium directly, for their own account, as agent for their customers and for accounts over which they exercise investment discretion. The Trustee’s and Custodian’s fees are paid by the Sponsor and are not separate expenses of the Trust. 

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Concentration of Risk

9 Months Ended

Sep. 30, 2022

Risks and Uncertainties [Abstract]

Concentration of Risk

4.    Concentration of Risk

The Trust’s sole business activity is the investment in palladium, and substantially all the Trust’s assets are holdings of palladium, which creates a concentration of risk associated with fluctuations in the price of palladium. Several factors could affect the price of palladium, including: (i) global palladium supply and demand, which is influenced by factors such as production and cost levels in major palladium-producing countries, recycling, autocatalyst demand, industrial demand, jewelry demand, investment demand, and sales of existing stockpiles of palladium, which have been a key source of supply and are likely to be exhausted soon, placing a higher burden on new mine supply; (ii) investors’ expectations with respect to the rate of inflation; (iii) currency exchange rates; (iv) interest rates; (v) investment and trading activities of hedge funds and commodity funds; and (vi) global or regional political, economic or financial events and situations. In addition, there is no assurance that palladium will maintain its long-term value in terms of purchasing power in the future. In the event that the price of palladium declines, the Sponsor expects the value of an investment in the Shares to decline proportionately. Each of these events could have a material effect on the Trust’s financial position and results of operations. 

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Indemnification

9 Months Ended

Sep. 30, 2022

Commitments and Contingencies Disclosure [Abstract]

Indemnification

5.    Indemnification

Under the Trust’s organizational documents, the Trustee (and its directors, employees and agents) and the Sponsor (and its members, managers, directors, officers, employees and affiliates) are indemnified by the Trust against any liability, cost or expense it incurs without gross negligence, bad faith, willful misconduct or willful malfeasance on its part and without reckless disregard on its part of its obligations and duties under the Trust’s organizational documents. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. 

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Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2022

Accounting Policies [Abstract]

Basis of Accounting

2.1.    Basis of Accounting 

The Sponsor has determined that the Trust falls within the scope of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 946, Financial Services—Investment Companies, and has concluded that for reporting purposes, the Trust is classified as an Investment Company. The Trust is not registered as an investment company under the Investment Company Act of 1940 and is not required to register under such act.

Valuation of Palladium

2.2.    Valuation of Palladium

The Trust follows the provisions of ASC 820, Fair Value Measurement (“ASC 820”). ASC 820 provides guidance for determining fair value and requires increased disclosure regarding the inputs to valuation techniques used to measure fair value. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. 

The Trust’s palladium is held by JPMorgan Chase Bank, N.A. (the “Custodian”), on behalf of the Trust, at its London, England vaulting premises. The Trust’s palladium may also be held by UBS AG, or any other firm selected by the Custodian to hold the Trust’s palladium in the Trust’s allocated account in the firm’s vault premises on a segregated basis and whose appointment has been approved by the Sponsor. At September 30, 2022, approximately 28.14% of the Trust’s palladium was held by one or more sub-custodians.

The Trust’s palladium is recorded at fair value. The cost of palladium is determined according to the average cost method and the fair value is based on the afternoon session of the twice daily fix of an ounce of palladium administered by the London Metal Exchange (“LME”) (the “LME PM Fix”). Realized gains and losses on transfers of palladium, or palladium distributed for the redemption of Shares, are calculated on a trade date basis as the difference between the fair value and average cost of palladium transferred.

The LME is responsible for the administration of the electronic palladium price fixing system (“LMEbullion”) that replicates electronically the manual London palladium fix processes previously employed by the London Platinum and Palladium Fixing Company Ltd (“LPPFCL”), as well as providing electronic market clearing processes for palladium bullion transactions at the fixed prices established by the LME pricing mechanism. LMEbullion, like the previous London palladium fix processes, establishes and publishes fixed prices for troy ounces of palladium twice each London trading day during fixing sessions beginning at 9:45 a.m. London time (the” LME AM Fix”) and 2:00 p.m. London time (the “LME PM Fix”).

Once the value of  palladium has been determined, the net asset value (the “NAV”) is computed by the Trustee by deducting all accrued fees, expenses and other liabilities of the Trust, including the remuneration due to the Sponsor (the “Sponsor’s Fee”), from the fair value of the palladium and all other assets held by the Trust.

The Trust recognizes changes in fair value of the investment in palladium as changes in unrealized gains or losses on investment in palladium through the Statement of Operations.

The per Share amount of palladium exchanged for a purchase or redemption is calculated daily by the Trustee using the LME PM Fix to calculate the palladium amount in respect of any liabilities for which covering palladium sales have not yet been made, and represents the per Share amount of palladium held by the Trust, after giving effect to its liabilities, to cover expenses and liabilities and any losses that may have occurred.

Fair Value Hierarchy

ASC 820 establishes a hierarchy that prioritizes inputs to valuation techniques used to measure fair value. The three levels of inputs are as follows:

– Level 1. Unadjusted quoted prices in active markets for identical assets or liabilities that the Trust has the ability to access.

– Level 2. Observable inputs other than quoted prices included in level 1 that are observable for the asset or liability either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments and similar data.

– Level 3. Unobservable inputs for the asset or liability to the extent that relevant observable inputs are not available, representing the Trust’s own assumptions about the assumptions that a market participant would use in valuing the asset or liability, and that would be based on the best information available.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in level 3.

The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

The Trust’s investment in palladium is classified as a level 1 asset, as its value is calculated using unadjusted quoted prices from primary market sources.

The categorization of the Trust’s assets is as shown below:

(Amounts in 000’s of US$)	September 30, 2022		December 31, 2021
Level 1
Investment in palladium	$	359,056	$	358,161

There were no transfers between levels during the nine months ended September 30, 2022 or the year ended December 31, 2021.

Palladium Receivable and Payable

2.3.    Palladium Receivable and Payable

Palladium receivable or payable represents the quantity of palladium covered by contractually binding orders for the creation or redemption of Shares respectively, where the palladium has not yet been transferred to or from the Trust’s account. Generally, ownership of palladium is transferred within two business days of the trade date. At September 30, 2022, the Trust had no palladium receivable or payable for the creation or redemption of Shares. At December 31, 2021, the Trust had no palladium receivable or payable for the creation or redemption of Shares.

Creations and Redemptions of Shares

2.4.    Creations and Redemptions of Shares

The Trust expects to create and redeem Shares from time to time, but only in one or more Baskets (a Basket equals a block of 25,000 Shares). The Trust issues Shares in Baskets to Authorized Participants on an ongoing basis. Individual investors cannot purchase or redeem Shares in direct transactions with the Trust. An Authorized Participant is a person who (1) is a registered broker-dealer or other securities market participant such as a bank or other financial institution which is not required to register as a broker-dealer to engage in securities transactions; (2) is a participant in The Depository Trust Company; (3) has entered into an Authorized Participant Agreement with the Trustee and the Sponsor; and (4) has established an Authorized Participant Unallocated Account with the Trust’s Custodian or other palladium bullion clearing bank. An Authorized Participant Agreement is an agreement entered into by each Authorized Participant, the Sponsor and the Trustee which provides the procedures for the creation and redemption of Baskets and for the delivery of the palladium required for such creations and redemptions. An Authorized Participant Unallocated Account is an unallocated palladium account, either loco London or loco Zurich, established with the Custodian or a palladium bullion clearing bank by an Authorized Participant.

The creation and redemption of Baskets is only made in exchange for the delivery to the Trust or the distribution by the Trust of the amount of palladium represented by the Baskets being created or redeemed, the amount of which is based on the combined NAV of the number of Shares included in the Baskets being created or redeemed determined on the day the order to create or redeem Baskets is properly received.

Authorized Participants may, on any business day, place an order with the Trustee to create or redeem one or more Baskets. The typical settlement period for Shares is two business days. In the event of a trade date at period end, where a settlement is pending, a respective account receivable and/or payable will be recorded. When palladium is exchanged in settlement of a redemption, it is considered a sale of palladium for financial statement purposes.

The amount of palladium represented by the Baskets created or redeemed can only be settled to the nearest 1/1000th of an ounce. As a result, the value attributed to the creation or redemption of Shares may differ from the value of palladium to be delivered or distributed by the Trust. In order to ensure that the correct amount of palladium is available at all times to back the Shares, the Sponsor accepts an adjustment to its Sponsor’s Fee in the event of any shortfall or excess on each transaction. For each transaction, this amount is not more than 1/1000th of an ounce of palladium.

As the Shares of the Trust are subject to redemption at the option of Authorized Participants, the Trust has classified the outstanding Shares as Net Assets. Changes in the number of Shares outstanding are presented in the Statement of Changes in Net Assets.

Income Taxes

2.5.    Income Taxes

The Trust is classified as a “grantor trust” for U.S. federal income tax purposes. As a result, the Trust itself will not be subject to U.S. federal income tax. Instead, the Trust’s income and expenses will “flow through” to the Shareholders, and the Trustee will report the Trust’s proceeds, income, deductions, gains, and losses to the Internal Revenue Service on that basis.

The Sponsor has evaluated whether or not there are uncertain tax positions that require financial statement recognition and has determined that no reserves for uncertain tax positions are required as of September 30, 2022 or December 31, 2021.

Investment in Palladium

2.6.    Investment in Palladium

Changes in ounces of palladium and their respective values for the three and nine months ended September 30, 2022 and 2021 are set out below:

	Three Months Ended September 30, 2022			Three Months Ended September 30, 2021
(Amounts in 000’s of US$, except for ounces data)
Ounces of palladium
Opening balance		176,345.5			182,072.1
Creations		—			23,312.9
Redemptions		(13,906.7	)		(32,637.3	)
Transfers of palladium to pay expenses		(263.3	)		(269.0	)
Closing balance		162,175.5			172,478.7
Investment in palladium
Opening balance	$	332,940		$	492,870
Creations		—			57,616
Redemptions		(28,815	)		(83,187	)
Realized gain on palladium distributed for the redemption of Shares		575			24,682
Transfers of palladium to pay expenses		(529	)		(716	)
Realized (loss) / gain on palladium transferred to pay expenses		(6	)		236
Change in unrealized gain / (loss) on investment in palladium		54,891			(163,964	)
Closing balance	$	359,056		$	327,537

	Nine Months Ended September 30, 2022			Nine Months Ended September 30, 2021
(Amounts in 000’s of US$, except for ounces data)
Ounces of palladium
Opening balance		181,531.1			152,187.5
Creations		39,500.4			65,351.4
Redemptions		(58,033.8	)		(44,320.8	)
Transfers of palladium to pay expenses		(822.2	)		(739.4	)
Closing balance		162,175.5			172,478.7
Investment in palladium
Opening balance	$	358,161		$	356,424
Creations		112,111			169,308
Redemptions		(120,921	)		(114,007	)
Realized gain on palladium distributed for the redemption of Shares		5,320			37,389
Transfers of palladium to pay expenses		(1,773	)		(1,911	)
Realized gain on palladium transferred to pay expenses		151			704
Change in unrealized gain / (loss) on investment in palladium		6,007			(120,370	)
Closing balance	$	359,056		$	327,537

Expenses / Realized Gains / Losses

2.7.    Expenses / Realized Gains / Losses

The primary expense of the Trust is the Sponsor’s Fee, which is paid by the Trust through in-kind transfers of palladium to the Sponsor.

The Trust will transfer palladium to the Sponsor to pay the Sponsor’s Fee that accrues daily at an annualized rate equal to 0.60% of the adjusted daily net asset value (“ANAV”) of the Trust, paid monthly in arrears. 

The Sponsor has agreed to assume administrative and marketing expenses incurred by the Trust, including the Trustee’s monthly fee and out of pocket expenses, the Custodian’s fee and the reimbursement of the Custodian’s expenses, exchange listing fees, United States Securities and Exchange Commission (the “SEC”) registration fees, printing and mailing costs, audit fees and up to $100,000 per annum in legal expenses.

For the three months ended September 30, 2022 and 2021, the Sponsor’s Fee was $538,123 and $648,684, respectively. For the nine months ended September 30, 2022 and 2021, the Sponsor’s Fee was $1,761,406 and $1,889,843, respectively.  

At September 30, 2022 and at December 31, 2021, the fees payable to the Sponsor were $177,895 and $189,455, respectively.

With respect to expenses not otherwise assumed by the Sponsor, the Trustee will, at the direction of the Sponsor or in its own discretion, sell the Trust’s palladium as necessary to pay these expenses. When selling palladium to pay expenses, the Trustee will endeavor to sell the smallest amounts of palladium needed to pay these expenses in order to minimize the Trust’s holdings of assets other than palladium. Other than the Sponsor’s Fee, the Trust had no expenses during the three and nine months ended September 30, 2022 and 2021.

Unless otherwise directed by the Sponsor, when selling palladium the Trustee will endeavor to sell at the price established by the LME PM Fix. The Trustee will place orders with dealers (which may include the Custodian) through which the Trustee expects to receive the most favorable price and execution of orders. The Custodian may be the purchaser of such palladium only if the sale transaction is made at the next LME PM Fix or such other publicly available price that the Sponsor deems fair, in each case as set following the sale order. A gain or loss is recognized based on the difference between the selling price and the average cost of the palladium sold. Neither the Trustee nor the Sponsor is liable for depreciation or loss incurred by reason of any sale.

Realized gains and losses result from the transfer of palladium for Share redemptions and / or to pay expenses and are recognized on a trade date basis as the difference between the fair value and average cost of palladium transferred.

Subsequent Events

2.8.    Subsequent Events

In accordance with the provisions set forth in FASB ASC 855-10, Subsequent Events, the Trust’s management has evaluated the possibility of subsequent events impacting the Trust’s financial statements through the filing date. During this period, no material subsequent events requiring adjustment to or disclosure in the financial statements were identified. 

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Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2022

Accounting Policies [Abstract]

The categorization of the Trust’s assets is as shown below:

The categorization of the Trust’s assets is as shown below:

(Amounts in 000’s of US$)	September 30, 2022		December 31, 2021
Level 1
Investment in palladium	$	359,056	$	358,161

Changes in ounces of palladium and their respective values for the three and nine months ended September 30, 2022 and 2021 are set out below:

Changes in ounces of palladium and their respective values for the three and nine months ended September 30, 2022 and 2021 are set out below:

	Three Months Ended September 30, 2022			Three Months Ended September 30, 2021
(Amounts in 000’s of US$, except for ounces data)
Ounces of palladium
Opening balance		176,345.5			182,072.1
Creations		—			23,312.9
Redemptions		(13,906.7	)		(32,637.3	)
Transfers of palladium to pay expenses		(263.3	)		(269.0	)
Closing balance		162,175.5			172,478.7
Investment in palladium
Opening balance	$	332,940		$	492,870
Creations		—			57,616
Redemptions		(28,815	)		(83,187	)
Realized gain on palladium distributed for the redemption of Shares		575			24,682
Transfers of palladium to pay expenses		(529	)		(716	)
Realized (loss) / gain on palladium transferred to pay expenses		(6	)		236
Change in unrealized gain / (loss) on investment in palladium		54,891			(163,964	)
Closing balance	$	359,056		$	327,537

	Nine Months Ended September 30, 2022			Nine Months Ended September 30, 2021
(Amounts in 000’s of US$, except for ounces data)
Ounces of palladium
Opening balance		181,531.1			152,187.5
Creations		39,500.4			65,351.4
Redemptions		(58,033.8	)		(44,320.8	)
Transfers of palladium to pay expenses		(822.2	)		(739.4	)
Closing balance		162,175.5			172,478.7
Investment in palladium
Opening balance	$	358,161		$	356,424
Creations		112,111			169,308
Redemptions		(120,921	)		(114,007	)
Realized gain on palladium distributed for the redemption of Shares		5,320			37,389
Transfers of palladium to pay expenses		(1,773	)		(1,911	)
Realized gain on palladium transferred to pay expenses		151			704
Change in unrealized gain / (loss) on investment in palladium		6,007			(120,370	)
Closing balance	$	359,056		$	327,537

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Organization (Details Narrative)	9 Months Ended
	Sep. 30, 2022 shares
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Minimum block of shares issued redeemed against palladium	25,000

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The categorization of the Trust’s assets is as shown below: (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment in palladium	$ 359,056	$ 358,161

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Changes in ounces of palladium and their respective values for the three and nine months ended September 30, 2022 and 2021 are set out below: (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022 USD ($) oz	Sep. 30, 2021 USD ($) oz	Sep. 30, 2022 USD ($) oz	Sep. 30, 2021 USD ($) oz
Accounting Policies [Abstract]
Opening balance | oz	176,345.5	182,072.1	181,531.1	152,187.5
Creations | oz		23,312.9	39,500.4	65,351.4
Redemptions | oz	(13,906.7)	(32,637.3)	(58,033.8)	(44,320.8)
Transfers of palladium to pay expenses | oz	(263.3)	(269.0)	(822.2)	(739.4)
Closing balance | oz	162,175.5	172,478.7	162,175.5	172,478.7
Opening balance	$ 332,940	$ 492,870	$ 358,161	$ 356,424
Creations		57,616	112,111	169,308
Redemptions	(28,815)	(83,187)	(120,921)	(114,007)
Realized gain on palladium distributed for the redemption of Shares	575	24,682	5,320	37,389
Transfers of palladium to pay expenses	(529)	(716)	(1,773)	(1,911)
Realized gain on palladium transferred to pay expenses	(6)	236	151	704
Change in unrealized gain / (loss) on investment in palladium	54,891	(163,964)	6,007	(120,370)
Closing balance	$ 359,056	$ 327,537	$ 359,056	$ 327,537

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Significant Accounting Policies (Details Narrative) - USD ($)		3 Months Ended		9 Months Ended
		Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021
Accounting Policies [Abstract]
Percentage of palladium held by sub-custodians		28.14%		28.14%
Palladium receivable		$ 0		$ 0		$ 0
Palladium payable		0		$ 0		0
Minimum block of shares issued redeemed against palladium				25,000
Reserve for uncertain tax positions		$ 0		$ 0		0
Expense ratio	[1]	0.60%	0.60%	0.60%	0.60%
Maximum sponsor fee for legal expenses				$ 100,000
Sponsor's Fee		$ 538,123	$ 648,684	1,761,406	$ 1,889,843
Fees payable to Sponsor		177,895		177,895		$ 189,455
All other expenses		$ 0	$ 0	$ 0	$ 0

[1] Annualized for periods less than one year.