abrdn Platinum ETF Trust Annual Report - Your 2024 Performance Snapshot

For investors seeking to understand the abrdn Platinum ETF Trust (PPLT), this summary provides a clear, jargon-free overview of its performance for the year ending December 31, 2024. Our goal is to help you easily grasp the key aspects of this investment and assess its alignment with your financial objectives.

1. Business Overview

The abrdn Platinum ETF Trust (PPLT) is not a traditional company selling products or services. Instead, it is an Exchange Traded Fund (ETF) that offers investors a straightforward way to gain exposure to the price movements of physical platinum. Its main goal is to reflect the price of physical platinum, minus its operating costs.

PPLT addresses the challenge of investing in platinum bars directly—avoiding the hassle, expense, or security concerns of buying and storing them yourself. It achieves this by holding actual physical platinum bullion in secure vaults. When you buy PPLT shares, you acquire a tiny, fractional interest in that physical platinum.

The Trust operates passively, without employees or an active trading strategy. Its platinum holdings primarily back your shares, cover the Sponsor's annual fee (its main operating cost), and facilitate share redemptions. The Sponsor, abrdn Capital Management LLC, oversees the Trust's operations and ensures it adheres to its stated objective.

2. Financial Performance

Since PPLT is not a traditional business, it does not generate "revenue" or "profit." Its financial performance is best understood by tracking the value of its underlying platinum holdings and how that translates to its share price.

Key Performance Indicators for 2024:

• Total Asset Value Growth: The Trust's total asset value grew significantly during the year ending December 31, 2024. The value of its platinum holdings (its "redeemable value") surged from approximately $1.02 billion at the end of 2023 to about $2.86 billion by the end of 2024. This represents a substantial 181% increase in asset value year-over-year.
• Shares Outstanding Growth: Reflecting this growth, the number of shares available to investors also expanded. Shares outstanding grew from 12.2 million at the end of 2023 to 15.55 million by the end of 2024, a solid 27.5% increase. This indicates strong investor interest and capital inflows into the Trust, likely driven by a rising platinum price and increased demand for platinum exposure.
• Net Asset Value (NAV) Performance: The Trust's primary performance metric is its Net Asset Value (NAV) per share, which reflects the market value of the platinum attributable to each share, less expenses. The 181% increase in total asset value suggests a strong rise in NAV per share, assuming this growth outpaced the increase in shares outstanding.
• Market Price vs. NAV: PPLT shares trade on the NYSE Arca. Investors should monitor how the market price of PPLT shares compares to its NAV per share. While ETFs are designed to trade close to their NAV, slight premiums or discounts can occur due to market supply and demand dynamics.
• Expense Ratio: The Sponsor charges an annual fee, known as the expense ratio, a critical factor for any ETF. PPLT covers this fee by selling a small amount of platinum from its holdings. This gradually reduces the amount of platinum each share represents over time, directly impacting performance. Consequently, the Trust's return will always be slightly less than platinum's pure price appreciation.

3. Risk Factors

Investing in PPLT carries specific risks that could impact your investment value:

• Platinum Price Volatility: This is the most significant risk. The value of your investment directly ties to the global price of platinum, which can fluctuate dramatically due to economic conditions, industrial demand, geopolitical events, and speculative trading.
• Custodian Risk (Unallocated Platinum): While most platinum is allocated, the custodian may hold a small portion (typically a working balance) in an "unallocated" account. If the custodian faces severe financial difficulties, this unallocated platinum becomes an unsecured obligation and might not be fully recoverable.
• Market Demand Changes: Industrial demand heavily influences platinum's price, particularly from the automotive sector (catalytic converters), jewelry, and increasingly, new technologies like hydrogen fuel cells. A significant decline in demand from these key sectors could negatively impact platinum prices.
• Tracking Error Risk: Due to expenses, market liquidity, and operational factors, PPLT's performance may not perfectly track the spot price of platinum.
• Liquidity Risk: While PPLT shares are generally liquid on the NYSE Arca, extreme market conditions could lead to wider bid-ask spreads, making it harder to buy or sell shares at desired prices.
• Regulatory Risk: Although PPLT is not regulated as an investment company or a commodity pool, it is subject to SEC oversight as an ETF. Changes in regulations pertaining to ETFs or commodity markets could impact the Trust's operations or investor appeal.
• Tax Implications: Gains from selling PPLT shares are generally taxed as collectibles, which may be subject to a higher long-term capital gains tax rate (currently up to 28%) than traditional equities.
• Geopolitical and Supply Chain Risks: Platinum supply concentrates in a few regions (e.g., South Africa, Russia). Geopolitical instability, labor disputes, or disruptions in these regions could impact supply and price.
• Cybersecurity Risk: Like any financial entity, the Trust and its service providers face cybersecurity risks that could disrupt operations or compromise data.

4. Management's Discussion and Analysis of Financial Condition and Results of Operations

This section provides a deeper look into the Trust's financial condition and the factors influencing its performance during the year ended December 31, 2024.

Results of Operations: The Trust's performance directly links to the price of physical platinum and investor demand for its shares. In 2024, the Trust achieved substantial growth, as its total platinum holdings increased by 181% to $2.86 billion. A favorable platinum market, where increased demand outstripped supply, primarily drove this significant appreciation. Concurrently, investor interest in gaining platinum exposure through an accessible and transparent vehicle like PPLT led to a 27.5% increase in shares outstanding, reflecting strong capital inflows.

The Net Asset Value (NAV) per share, the most direct measure of the Trust's intrinsic value, generally tracked the physical platinum price, adjusted for the Trust's expenses. The Sponsor's annual fee, which the Trust pays by selling a small, proportionate amount of platinum from its holdings, represents the primary operational cost. This fee directly impacts the Trust's performance relative to platinum's pure spot price. Despite this, overall market conditions for platinum in 2024 supported significant asset growth for the Trust.

Market Trends Impacting Performance: The platinum market in 2024 showed a significant imbalance, with demand outstripping supply—a trend that often supports higher prices. Total supply from mining and recycling reached approximately 7.095 million ounces, a slight decrease from 2023, partly because Russian supply notably dropped. Conversely, overall platinum demand rose to approximately 7.869 million ounces, propelled by:

• Automotive Industry: Continued strong demand from the automotive sector for catalytic converters.
• Investment Demand: A standout surge to 525,000 ounces, indicating renewed investor interest and a significant rebound from prior years.
• Jewellery Demand: Remained relatively stable. This created a substantial market deficit of 774,000 ounces, necessitating a drawdown of existing platinum stocks. Such deficits typically exert upward pressure on prices. These market dynamics were a key driver of the Trust's asset value appreciation in 2024.

Financial Condition: The Trust maintains a unique and robust financial condition. It holds no cash beyond minimal operational needs and carries no debt. Its sole asset is physical platinum bullion, which it holds in secure, allocated accounts with its custodian, ICBC Standard Bank Plc. This structure minimizes credit risk and counterparty exposure. The Trust meets expenses through the periodic sale of platinum, directly tying its financial obligations to its underlying asset.

Liquidity and Capital Resources: The Trust's shares list and trade on NYSE Arca, providing daily liquidity for investors. A creation and redemption mechanism involving authorized participants maintains the liquidity of the Trust's shares. This mechanism allows for creating new shares when market demand drives the share price above the NAV, and redeeming shares when the price falls below NAV. This helps keep the market price of the shares closely aligned with the underlying value of the platinum the Trust holds. The underlying physical platinum market itself is generally liquid, facilitating these creation and redemption activities.

5. Future Outlook

The Trust's performance depends entirely on the global price of platinum. Therefore, understanding PPLT's future outlook requires analyzing the broader platinum market. Factors such as global economic growth, industrial demand (especially from the automotive and emerging hydrogen economy sectors), supply disruptions from major producing regions, and investor sentiment will continue to influence platinum prices and, consequently, the value of the Trust's shares.

6. Competitive Position

PPLT offers a compelling competitive position for investors seeking platinum exposure:

• Easy Access & Cost-Effective: It provides a simple, liquid, and often more cost-effective way to invest in physical platinum compared to directly buying, storing, and insuring physical bars.
• Transparency: The Trust provides daily website updates on its Net Asset Value (NAV) per share and the exact amount of platinum it holds, offering clear insight into its holdings.
• Physical Backing: Unlike some other platinum investment products that might use futures contracts or other derivatives, actual physical platinum bullion directly backs PPLT, minimizing counterparty risk.
• Exchange Traded: Its listing on NYSE Arca allows for easy buying and selling throughout the trading day, similar to stocks.