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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


March 31, 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









712
Fifth Avenue




,


49

th

Floor










New York


,


NY






(Address of principal executive
offices)








10019






(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 May 5, 2022, abrdn Palladium ETF Trust had


2,050,000


abrdn
Physical Palladium Shares ETF outstanding.




























abrdn Palladium ETF Trust






FORM 10-Q






FOR THE QUARTER ENDED MARCH 31, 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






12








Item 3.







Quantitative and Qualitative Disclosures About Market Risk






14








Item 4.







Controls and Procedures






14








PART II. OTHER INFORMATION










Item 1.







Legal Proceedings






15








Item 1A.







Risk Factors






15








Item 2.







Unregistered Sales of Equity Securities and Use of Proceeds






15








Item 3.







Defaults Upon Senior Securities






15








Item 4.







Mine Safety Disclosures






15








Item 5.







Other Information






15








Item 6.







Exhibits






16









SIGNATURES







17





















abrdn Palladium ETF Trust










PART I. FINANCIAL INFORMATION








Item 1. Financial Statements





Statements of Assets and Liabilities



At March 31, 2022 (Unaudited) and December 31, 2021










































































































































March 31, 2022



December 31, 2021


(Amounts in 000's of US$, except for Share and per Share data)









ASSETS









Investment in palladium (cost: March 31, 2022: $


415,255


; December 31, 2021: $


334,434


)


$


461,951




$


358,161



Total assets




461,951






358,161












LIABILITIES









Fees payable to Sponsor




228






190



Palladium payable




10,494










Total liabilities




10,722






190














NET ASSETS

(1)





$


451,229




$


357,971












(1)




Authorized share capital is




unlimited




with




no




par value per Share. Shares issued and outstanding at March 31, 2022 were




2,150,000




and at December 31, 2021 were




1,950,000




. Net asset values per Share at March 31, 2022 and December 31, 2021 were $


209.87


and $


183.58


, respectively.








See Notes to the Financial Statements











1














abrdn Palladium ETF Trust







Schedules of Investments





At March 31, 2022 (Unaudited) and December 31, 2021














































































































March 31, 2022


Description


oz



Cost



Fair Value



% of Net Assets




Investment in palladium


(in 000's of US$, except for oz and percentage data)



Palladium




204,493.3




$


415,255




$


461,951






102.37


%

Total investment in palladium




204,493.3




$


415,255




$


461,951






102.37


%

Less liabilities












10,722





(

2.37


)%

Net Assets










$


451,229






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









2














abrdn Palladium ETF Trust







Statements of Operations (Unaudited)



For the three months ended March 31, 2022 and 2021






































































































































































































































Three
Months




Ended




March 31, 2022







Three
Months




Ended




March 31, 2021




(Amounts in 000's of US$, except for Share and per Share data)









EXPENSES









Sponsor's Fee


$


594




$


563



Total expenses




594






563












Net investment loss



(

594


)



(

563


)










REALIZED AND UNREALIZED GAINS / (LOSSES)









Realized gain on palladium transferred to pay expenses




65






199



Realized gain on palladium distributed for the redemption of Shares




4,305






9,510



Change in unrealized gain on investment in palladium




21,908






34,733



Change in unrealized gain on unsettled creations or redemptions




1,061










Total gain on investment in palladium




27,339






44,442












Change in net assets from operations


$


26,745




$


43,879












Net increase / (decrease) in net assets per Share


$


13.67




$


26.57












Weighted average number of Shares




1,956,667






1,651,389








See Notes to the Financial Statements











3














abrdn Palladium ETF Trust







Statements of Changes in Net Assets (Unaudited)



For the three months ended March 31, 2022 and 2021

















































































































Three Months Ended March 31, 2022


(Amounts in 000's of US$, except for Share data)


Shares



Amount


Opening balance at January 1, 2022




1,950,000




$


357,971



Net investment loss







(

594


)

Realized gain on investment in palladium








4,370



Change in unrealized gain on investment in palladium








21,908



Change in unrealized gain on unsettled creations or redemptions








1,061



Creations




425,000






112,112



Redemptions



(

225,000


)



(

45,599


)

Closing balance at March 31, 2022




2,150,000




$


451,229







































































































Three Months Ended March 31, 2021


(Amounts in 000's of US$, except for Share data)


Shares



Amount


Opening balance at January 1, 2021




1,625,000




$


356,238



Net investment loss







(

563


)

Realized gain on investment in palladium








9,709



Change in unrealized gain on investment in palladium








34,733



Creations




125,000






28,524



Redemptions



(

100,000


)



(

23,814


)

Closing balance at March 31, 2021




1,650,000




$


404,827










See Notes to the Financial Statements











4














abrdn Palladium ETF Trust







Financial Highlights (Unaudited)



For the three months ended March 31, 2022 and 2021



































































































































































































Three Months


Ended


March 31, 2022



Three Months


Ended


March 31, 2021


Per Share Performance (for a Share outstanding throughout the entire period)









Net asset value per Share at beginning of period


$


183.58




$


219.22



Income from investment operations:









Net investment loss



(

0.30


)



(

0.34


)

Total realized and unrealized gains or losses on investment in palladium




26.59






26.47



Change in net assets from operations




26.29






26.13












Net asset value per Share at end of period


$


209.87




$


245.35












Weighted average number of Shares




1,956,667






1,651,389















Expense ratio

(1)








0.60


%




0.60


%













Net investment loss ratio

(1)







(

0.60


)%



(

0.60


)%













Total return, net asset value

(2)








14.32


%




11.92


%
















(1)




Annualized for periods less than one year.




(2)




Total return is not annualized.










See Notes to the Financial Statements











5












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 and for the three
months ended March 31, 2022 and for all periods presented have been made.





These financial statements should be read in conjunction with
the Trust’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021. The results of operations for the three
months ended March 31, 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.











6
















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
March 31, 2022, approximately


31.40


% 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.











7
















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$)




March
31, 2022







December
31, 2021











Level 1









Investment in palladium


$


461,951




$


358,161







There were no transfers between levels during the three months ended March 31, 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 March 31, 2022, the Trust had


no


palladium receivable for the creation of Shares
and $


10,493,871


of palladium payable for the 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.











8
















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 management
fees 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 March 31, 2022 or December 31, 2021.










9
















abrdn Palladium ETF Trust









Notes to the Financial Statements (Unaudited)











2.6.

Investment in Palladium









Changes in ounces of palladium and their respective values
for the three months ended March 31, 2022 and 2021 are set out below:























































































































































































































Three Months


Ended


March 31, 2022



Three Months


Ended


March 31, 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






11,688.4



Redemptions



(

16,273.3


)



(

9,348.2


)

Transfers of palladium to pay expenses



(

264.9


)



(

227.4


)

Closing balance




204,493.3






154,300.3












Investment in palladium









Opening balance


$


358,161




$


356,424



Creations




112,112






28,524



Redemptions



(

35,105


)



(

23,814


)

Realized gain on palladium distributed for the redemption of Shares




4,305






9,510



Transfers of palladium to pay expenses



(

556


)



(

537


)

Realized gain on palladium transferred to pay expenses




65






199



Change in unrealized gain on investment in palladium




21,908






34,733



Change in unrealized gain on unsettled creations or redemptions




1,061










Closing balance


$


461,951




$


405,039













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 March 31, 2022 and 2021, the Sponsor's
Fee was $


594,312


and $


562,747


, respectively.





At March 31, 2022 and at December 31, 2021, the fees
payable to the Sponsor were $


227,739


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 months ended March 31, 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.











10
















abrdn Palladium ETF Trust









Notes to the Financial Statements (Unaudited)








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.








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.











11












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.










12











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 March 31, 2022






The Trust’s NAV increased from $357,971,468
at December 31, 2021 to $451,228,945 at March 31, 2022, a 26.05% increase for the quarter. The increase in the Trust’s NAV
resulted from an increase in the price per ounce of palladium, which rose 14.50% from $1,973.00 at December 31, 2021 to $2,259.00
at March 31, 2022, and an increase in outstanding Shares, which rose from 1,950,000 Shares at December 31, 2021 to 2,150,000 Shares
at March 31, 2022, as a result of 425,000 Shares (17 Baskets) being created and 225,000 Shares (9 Baskets) being redeemed during
the quarter.





The NAV per Share increased 14.32% from $183.58
at December 31, 2021 to $209.87 at March 31, 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 $594,312 for the quarter, 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 quarter, compared with a low of $172.49 at January 6, 2022.





The increase in net assets from operations for
the quarter ended March 31, 2022 was $26,745,073, resulting from a realized gain of $65,380 on the transfer of palladium to pay
expenses, a realized gain of $4,305,376 on palladium distributed for the redemption of Shares, a change in unrealized gain on
investment in palladium of $21,907,759 and a change in unrealized gain on unsettled redemptions of $1,060,870, offset by the
Sponsor’s Fee of $594,312. Other than the Sponsor’s Fee, the Trust had no expenses during the quarter ended March 31,
2022.







The Quarter Ended March 31, 2021






The Trust’s NAV increased from $356,238,300
at December 31, 2020 to $404,826,709 at March 31, 2021, a 13.64% increase for the quarter. The increase in the Trust’s NAV
resulted primarily from an increase in the price per ounce of palladium, which rose 12.08%from $2,342.00 at December 31, 2020 to
$2,625.00 at March 31, 2021 and an increase in outstanding Shares, which rose from 1,625,000 Shares at December 31, 2020 to 1,650,000
Shares at March 31, 2021, as a result of 125,000 Shares (5 Baskets) being created and 100,000 Shares (4 Baskets) being redeemed.





The NAV per Share increased 11.92% from $219.22
at December 31, 2020 to $245.35 at March 31, 2021. 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 $562,747 for the quarter, or 0.60% of the Trust’s
ANAV on an annualized basis.





The NAV per Share of $250.36 at March 18, 2021
was the highest during the quarter, compared with a low of $211.24 at February 4, 2021.










13











The increase in net assets from operations for
the quarter ended March 31, 2021 was $43,878,521, resulting from a realized gain of $198,752 on the transfer of palladium to pay
expenses, a realized gain of $9,509,812 on palladium distributed for the redemption of Shares, and a change in unrealized gain
on investment in palladium of $34,732,704, and the Sponsor’s Fee of $562,747. Other than the Sponsor’s Fee, the Trust
had no expenses during the quarter ended March 31, 2021.







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 March 31, 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 March 31, 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 March 31, 2022 that have materially affected, or are
reasonably likely to materially affect, the Trust’s or Sponsor’s internal control over financial reporting.










14














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 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 March 31, 2022:



17 Baskets were created.



9 Basket were redeemed.























































Period






Total Baskets




Redeemed






Total Shares


Redeemed






Average ounces


of palladium


per Share




January 2022




5




125,000




0.093



February 2022




-




-




-



March 2022




4




100,000




0.093





9




225,000




0.093










Item 3. Defaults Upon Senior Securities



None.








Item 4. Mine Safety Disclosures



Not applicable.








Item 5. Other Information



None.










15














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 March 31, 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 March 31, 2022, formatted in Inline XBRL (included as Exhibit 101).










16














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: May 9, 2022



/s/ Steven Dunn




Steven Dunn *




President and Chief Executive Officer




(Principal Executive Officer)





Date: May 9, 2022



/s/ Andrea Melia




Andrea Melia *




Chief Financial Officer and Treasurer




(Principal Financial Officer and Principal Accounting Officer)













*



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.












17






The above information was disclosed in a filing to the SEC. To see the filing, click here.

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