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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


June 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










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 August 3, 2022, abrdn Palladium ETF Trust had


1,800,000


abrdn Physical Palladium Shares ETF outstanding.

































abrdn
Palladium ETF Trust










FORM
10-Q










FOR
THE QUARTER ENDED JUNE 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






16












Item 6.







Exhibits






17















SIGNATURES






18




















abrdn
Palladium ETF Trust












PART
I. FINANCIAL INFORMATION












Item
1. Financial Statements









Statements
of Assets and Liabilities




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

































































































































June 30, 2022



December 31, 2021


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









ASSETS









Investment in palladium (cost: June 30, 2022: $


358,096


; December 31, 2021: $


334,434


)


$


332,940




$


358,161



Total assets




332,940






358,161












LIABILITIES









Fees payable to Sponsor




169






190



Total liabilities




169






190














NET ASSETS

(1)





$


332,771




$


357,971












(1)




Authorized
share capital is




unlimited




with




no




par value per Share. Shares issued and outstanding at June 30, 2022 were




1,900,000




and
at December 31, 2021 were




1,950,000




. Net asset values per Share at June 30, 2022 and December 31, 2021 were $


175.14


and $


183.58


,
respectively.









See
Notes to the Financial Statements












1













abrdn
Palladium ETF Trust









Schedules
of Investments




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


























































































































June 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




176,345.5




$


358,096




$


332,940






100.05


%

Total investment in palladium




176,345.5




$


358,096




$


332,940






100.05


%

Less liabilities











(

169


)



(

0.05


)%

Net Assets










$


332,771






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 and six months ended June 30, 2022 and 2021


































































































































































































































































































































































































Three Months Ended


June 30, 2022



Three Months Ended


June 30, 2021



Six Months Ended


June 30, 2022



Six Months Ended


June 30, 2021


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

















EXPENSES

















Sponsor’s Fee


$


629




$


679




$


1,223




$


1,241



Total expenses




629






679






1,223






1,241




















Net investment loss



(

629


)



(

679


)



(

1,223


)



(

1,241


)


















REALIZED AND UNREALIZED GAINS / (LOSSES)

















Realized gain on palladium transferred to pay expenses




91






269






156






468



Realized gain on palladium distributed for the redemption of Shares




439






3,197






4,745






12,707



Change in unrealized (loss) / gain on investment in palladium



(

70,791


)




8,862





(

48,883


)




43,594



Change in unrealized (loss) / gain on unsettled creations or redemptions



(

1,061


)




159













159



Total (loss)/gain on investment in palladium



(

71,322


)




12,487





(

43,982


)




56,928




















Change in net assets from operations


$

(

71,951


)


$


11,808




$

(

45,205


)


$


55,687




















Net increase / (decrease) in net assets per Share


$

(

35.53


)


$


6.65




$

(

22.70


)


$


32.50




















Weighted average number of Shares




2,025,275






1,774,725






1,991,160






1,713,398









See
Notes to the Financial Statements












3

















abrdn
Palladium ETF Trust









Statements
of Changes in Net Assets (Unaudited)




For
the three and six months ended June 30, 2022 and 2021


























































































































































































Three Months Ended June 30, 2022



Three Months Ended June 30, 2021


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


Shares



Amount



Shares



Amount


Opening balance




2,150,000




$


451,229






1,650,000




$


404,827



Net investment loss







(

629


)







(

679


)

Realized gain on investment in palladium








530










3,466



Change in unrealized (loss)/gain on investment in palladium







(

70,791


)








8,862



Change in unrealized (loss) / gain on unsettled creations or redemptions







(

1,061


)








159



Creations


















375,000






95,640



Redemptions



(

250,000


)



(

46,507


)



(

25,000


)



(

7,006


)

Closing balance




1,900,000




$


332,771






2,000,000




$


505,269

























































































































































































Six Months Ended June 30, 2022



Six Months Ended June 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







(

1,223


)







(

1,241


)

Realized gain on investment in palladium








4,901










13,175



Change in unrealized (loss)/gain on investment in palladium







(

48,883


)








43,594



Change in unrealized gain on unsettled creations or redemptions



















159



Creations




425,000






112,111






500,000






124,164



Redemptions



(

475,000


)



(

92,106


)



(

125,000


)



(

30,820


)

Closing balance




1,900,000




$


332,771






2,000,000




$


505,269









See
Notes to the Financial Statements












4













abrdn
Palladium ETF Trust









Financial
Highlights (Unaudited)








For
the three and six months ended June 30, 2022 and 2021









































































































































































































































































































































Three Months Ended


June 30, 2022



Three Months Ended


June 30, 2021



Six Months Ended


June 30, 2022



Six Months Ended


June 30, 2021


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

















Net asset value per Share at beginning of period


$


209.87




$


245.35




$


183.58




$


219.22



Income from investment operations:

















Net investment loss



(

0.31


)



(

0.38


)



(

0.61


)



(

0.72


)

Total realized and unrealized gains or losses on investment in palladium



(

34.42


)




7.66





(

7.83


)




34.13



Change in net assets from operations



(

34.73


)




7.28





(

8.44


)




33.41




















Net asset value per Share at end of period


$


175.14




$


252.63




$


175.14




$


252.63




















Weighted average number of Shares




2,025,275






1,774,725






1,991,160






1,713,398























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)







(

16.55


)%




2.97


%



(

4.60


)%




15.24


%














(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 June 30, 2022, and for the three and six 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 for the fiscal year ended December 31, 2021. The results of operations for the three
and six months ended June 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.











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 June 30, 2022, approximately


33.77


% 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.











7
















abrdn Palladium ETF Trust









Notes to the Financial Statements (Unaudited)








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$)


June 30, 2022



December 31, 2021









Level 1









Investment in palladium


$


332,940




$


358,161







There were no transfers between levels during the six months ended June 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 June 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.











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 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 June 30, 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 and six months ended June 30, 2022 and 2021 are set out below:























































































































































































































Three Months Ended


June 30, 2022



Three Months Ended


June 30, 2021


(Amounts in 000’s of US$, except for ounces data)









Ounces of palladium









Opening balance




204,493.3






154,300.3



Creations











30,350.1



Redemptions



(

27,853.8


)



(

2,335.3


)

Transfers of palladium to pay expenses



(

294.0


)



(

243.0


)

Closing balance




176,345.5






182,072.1












Investment in palladium









Opening balance


$


461,951




$


405,039



Creations











83,167



Redemptions



(

57,001


)



(

7,006


)

Realized gain on palladium distributed for the redemption of Shares




439






3,197



Transfers of palladium to pay expenses



(

688


)



(

658


)

Realized gain on palladium transferred to pay expenses




91






269



Change in unrealized (loss) / gain on investment in palladium



(

70,791


)




8,862



Change in unrealized gain on unsettled creations or redemptions



(

1,061


)








Closing balance


$


332,940




$


492,870













































































































































































































Six Months


Ended


June 30, 2022



Six Months


Ended


June 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






42,038.5



Redemptions



(

44,127.3


)



(

11,683.5


)

Transfers of palladium to pay expenses



(

558.7


)



(

470.4


)

Closing balance




176,345.5






182,072.1












Investment in palladium









Opening balance


$


358,161




$


356,424



Creations




112,111






111,691



Redemptions



(

92,106


)



(

30,820


)

Realized gain on palladium distributed for the redemption of Shares




4,745






12,707



Transfers of palladium to pay expenses



(

1,244


)



(

1,194


)

Realized gain on palladium transferred to pay expenses




156






468



Change in unrealized (loss) / gain on investment in palladium



(

48,883


)




43,594



Closing balance


$


332,940




$


492,870













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.











10


















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 June 30, 2022 and 2021, the Sponsor’s
Fee was $


628,971


and $


678,413


, respectively. For the six months ended June 30, 2022 and 2021, the Sponsor’s Fee was $


1,223,283


and $


1,241,260


, respectively.





At June 30, 2022 and at December 31, 2021, the fees payable
to the Sponsor were $


168,684


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 six months ended June 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.









11












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 June 30, 2022










The
Trust’s NAV decreased from $451,228,945 at March 31, 2022 to $332,771,584 at June 30, 2022, a 26.25% decrease for the quarter.
The decrease in the Trust’s NAV resulted from a decrease in the price per ounce of palladium, which fell 16.42% from $2,259.00
at March 31, 2022 to $1,888.00 at June 30, 2022, and a decrease in outstanding Shares, which fell from 2,150,000 Shares at March
31, 2022 to 1,900,000 Shares at June 30, 2022, as a result of 250,000 Shares (10 Baskets) being redeemed during the quarter.








The
NAV per Share decreased 16.55% from $209.87 at March 31, 2022 to $175.14 at June 30, 2022. The Trust’s NAV per Share fell
slightly more than the price per ounce of palladium on a percentage basis due to the Sponsor’s Fee, which was $628,971 for
the quarter, or 0.60% of the Trust’s ANAV on an annualized basis.








The
NAV per Share of $231.76 at April 11, 2022 was the highest during the quarter, compared with a low of $167.95 at June 14, 2022.








The
decrease in net assets from operations for the quarter ended June 30, 2022 was $71,950,228, resulting from a realized gain of
$91,097 on the transfer of palladium to pay expenses and a realized gain of $439,452 on palladium distributed for the redemption
of Shares, offset by a change in unrealized loss on investment in palladium of $70,790,936, a change in unrealized loss on unsettled
redemptions of $1,060,870 and the Sponsor’s Fee of $628,971. Other than the Sponsor’s Fee, the Trust had no expenses
during the quarter ended March 31, 2022.










The
Six Months Ended June 30, 2022










The
Trust’s NAV decreased from $357,971,468 at December 31, 2021 to $332,771,584 at June 30, 2022, a 7.04% decrease for the
period. The decrease in the Trust’s NAV resulted primarily from a decrease in the price per ounce of palladium, which fell
4.31% from $1,973.00 at December 31, 2021 to $1,888.00 at June 30, 2022 and a decrease in outstanding Shares, which fell from
1,950,000 Shares at December 31, 2021 to 1,900,000 Shares at June 30, 2022, as a result of 425,000 Shares (17 Baskets) being created
and 475,000 Shares (19 Baskets) being redeemed.








The
NAV per Share decreased 4.60% from $183.58 at December 31, 2021 to $175.14 at June 30, 2022. The Trust’s NAV per Share fell
slightly more than the price per ounce of palladium on a percentage basis due to the Sponsor’s Fee, which was $1,223,283
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
decrease in net assets from operations for the period ended June 30, 2022 was $45,205,155, resulting from a realized gain of
$156,477 on the transfer of palladium to pay expenses and a realized gain of $4,744,828 on palladium distributed for the redemption
of Shares, offset by a change in unrealized loss on investment in palladium of $48,883,177 and the Sponsor’s Fee of
$1,223,283. Other than the Sponsor’s Fee, the Trust had no expenses during the period ended June 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 June 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 June 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 June
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 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 June 30, 2022:




0
Baskets were created.




10
Basket were redeemed.























































Period









Total
Baskets










Redeemed









Total
Shares


Redeemed








Average
ounces of


palladium per


Share




April 2022






2






50,000






0.093



May 2022






4






100,000






0.093



June 2022






4






100,000






0.093









10






250,000






0.093









Item
3. Defaults Upon Senior Securities





None.











Item
4. Mine Safety Disclosures





Not
applicable.











Item
5. Other Information









None.












16















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 June 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 June 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: August 5, 2022



/s/
Steven Dunn






Steven Dunn *






President and Chief Executive
Officer






(Principal Executive Officer)









Date: August 5, 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.








18






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

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