Palladium and rhodium prices have skyrocketed over the past two years in response to the increasingly emissions-conscious age however, ETF investors in the two metals have behaved "counterintuitively".

Both palladium and rhodium have outperformed gold on an ounce-by-ounce basis over the past two years with the precious metals soaring 117% and 310%, respectively, since the start of 2017.

The performance of the two metals has been aided by a shift away from diesel cars to smaller and more efficient gasoline ones, thanks to tighter emission controls in both Europe and China.

Vehicles in these markets now require higher loadings of both palladium and rhodium with the metals being preferred by the manufacturers, according to Johann Erasmus, head of ETFs at Standard Bank.

Environmental concerns around emissions have been heightened since the Volkswagen emissions scandal in 2015, which has driven the move away from diesel cars: "Europe's introduction of tighter controls on diesel is being augmented by legislation encouraging the development of hybrid electric and gasoline cars," Erasmus explained.

"All these trends are combining to drive higher industrial loadings of palladium and rhodium - at the expense of platinum."

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Despite this however, Eramus bemoaned ETF investors who have continued to invest in platinum ETFs at the expense of palladium and rhodium products.

"Investors [have] locked in the huge price gains achieved by palladium and rhodium ETFs over the last two years compared with the performance of the local equity market.

"[However], since all indicators show that palladium and rhodium prices are set to continue to increase over the next two to three years suggests that the sell-off of these two ETFs may be premature," he warned.

There is currently one rhodium ETF listed in Europe; the $310m Xtrackers Physical Rhodium ETC, while WisdomTree, iShares, Xtrackers and Invesco offer palladium ETCs.