Platinum ETF (PPLT) Set To Expand

by on June 2, 2010 | ETFs Mentioned:

ETF Securities, the giant in the European ETF scene that made the jump to the U.S. market last year, announced this week that it plans to issue new shares of two of its most popular physically-backed commodity ETFs. Effective May 26, the number of shares registered for the ETFS Physical Platinum Shares (PPLT) increased from 4.78 million to 11.22 million, while the registered shares of the ETFS Physical Palladium Shares (PALL) will grow from 12.88 million to 18.8 million. 

Each share of PPLT and PALL entitles the holder to approximately one-tenth of an ounce of the underlying metal, meaning that PPLT’s platinum holdings can now grow to just over 1.1 million ounces and the palladium held by PALL may now total almost 1.9 million ounces. In both cases, holdings at those levels would represent a significant portion of global supply. According to the prospectus filed by ETF Securities, total platinum demand in 2008 totaled just over 7.3 million ounces; palladium supply in the same year was about 7.9 million ounces (see guides to platinum ETF investing and palladium ETF investing).

Some investors have expressed concern that expanding physically-backed ETFs could become a problem if they become one of the largest holders of the underlying metal, but apparently the SEC isn’t concerned yet. PPLT and PALL endured a longer-than-usual approval process as regulators took the time to understand the impact such products would have on spot markets (see The Controversy Over Platinum ETFs).

Since being launched earlier this year, both PALL and PPLT have proven extremely popular with investors, recently holding total assets of about $350 million and $520 million, respectively. Across its four physically-backed precious metals ETF products, ETF Securities now manages more than $1.5 billion, making it one of the largest players in the exchange-traded commodity space in the U.S.

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Disclosure: No positions at time of writing.