Platinum and Palladium ETFs Outshine Gold in 2025
In a surprising turn of events for the investment landscape of 2025, exchange-traded funds focused on platinum and palladium have emerged as top performers, capturing investor attention away from the traditional appeal of gold. These funds have experienced remarkable surges, largely propelled by fundamental market shifts rather than fleeting speculative interest, signaling a robust and sustained growth trajectory for these industrial precious metals.
The abrdn Physical Platinum Shares ETF (PPLT) and the abrdn Physical Palladium Shares ETF (PALL) have demonstrated exceptional strength throughout the year. PPLT recorded an impressive nearly 9% increase on a recent Tuesday, while PALL followed closely with a 5.4% rise. Both ETFs subsequently reached their 52-week peak values, reflecting a historic ascent in the prices of their underlying metals. Although minor retractions were observed the following day, with palladium experiencing an almost 8% decrease and platinum nearly 3%, their year-to-date performance remains outstanding. Palladium's price has climbed over 85%, and platinum's a staggering 140%, positioning these ETFs among the leading commodity funds of the year. PPLT alone has appreciated by nearly 150% from its lowest point in the past year, underscoring its potential for investors eyeing the platinum group metals (PGMs).
The operational framework of these ETFs provides direct exposure to the physical metal, mirroring the performance of official benchmarks. PPLT specifically tracks the LBMA Platinum Price PM, the London Bullion Market Association's benchmark, and maintains an annual expense ratio of 0.60%. Similarly, PALL offers physical backing for palladium, sharing a comparable expense structure. The increasing interest in these funds aligns with platinum prices reaching unprecedented levels and palladium hitting its highest valuation since early 2023, indicative of a strong underlying market.
Several factors underpin the surging popularity of platinum and palladium ETFs. A primary driver is the tightening supply within the physical metals market, characterized by ongoing disruptions, restricted output from mining operations, and elevated lease rates, all contributing to a scarcity of available metal. Concurrently, the automotive industry continues to exhibit strong demand for these metals, particularly for their critical role in catalytic converters. These devices are essential for reducing emissions in gasoline-powered vehicles. With political signals suggesting a less aggressive push towards electric vehicles under the current administration, the outlook for continued internal combustion engine production brightens, thereby sustaining the demand for PGMs and fostering a favorable environment for their respective ETFs.
Furthermore, the robust performance of precious metals, including platinum and palladium, has defied expectations amid elevated real U.S. interest rates—a scenario that has historically dampened their appeal. Experts from entities like Mitsubishi's precious metals team note that the current rally appears to be rooted in long-term strategic positioning rather than speculative bubbles. Evidence supporting this includes a significant increase in inventories at major exchanges in both the U.S. and China, as reported by BullionVault. This confluence of tight supply, sustained industrial demand, and global geopolitical uncertainties has generated considerable and enduring upward momentum for these ETFs. For the foreseeable future, PPLT and PALL are on a clear upward trajectory, with little indication of a slowdown.