by Tom Lydon
Sprott Asset Management has filed to launch a physical platinum and palladium exchange traded fund, adding to its stable of precious metals ETFs.
The Canadian firm manages Sprott Physical Gold Trust (NYSEArca: PHYS) and Sprott Physical Silver Trust (NYSEArca: PSLV), which are listed on the New York Stock Exchange.
The funds are different from other precious metal ETFs in that investors can redeem large blocks of shares for physical delivery of the bullion. However, the closed-end funds can trade at premiums or discounts to net asset value.
For example, Sprott Physical Silver Trust is trading at a premium of more than 20% to NAV, according to the company’s website.
The silver fund holds nearly $700 million while Sprott Physical Gold Trust has over $2 billion.
The new ETF will invest in platinum and palladium bullion. The proposed value of the ETF is $115 million, according to the Sprott filing, while the management fee will total 0.5%.
“The removal of more physical metal from the market may help to boost prices further, market participants said. Many analysts attribute the rise in prices over the past two years in part to the rise in popularity of physically backed ETFs,” Reuters reported.
Platinum and palladium ETFs lagged gold in 2011, but a pickup in the global economy could boost the ETFs this year and help close the performance gap.
Funds focused on these metals have traded in Europe for years, but they are relatively new for U.S. investors and markets.
Full disclosure: Tom Lydon’s clients own SLV and GLD. John Spence owns ZSL.
