This is a passive sector ETF that tracks a rules-based index of integrated oil and gas companies and exploration and production companies, which explore for and produce crude oil and natural gas and refine and sell them. It is concentrated in the oil and gas industry.

It suits investors who want to narrow their energy exposure to the oil and gas industry and can tolerate the volatility that comes with oil price swings.

It is a passively managed (index-tracking) ETF run by Portfolio Building Block.

The fund tracks a rules-based index made up of integrated oil and gas companies, which explore for, produce, refine and sell crude oil and natural gas, along with specialized exploration and production companies. Because it concentrates on the oil and gas industry, it directly reflects trends across both the upstream and downstream segments of the energy business, and it selects holdings according to predetermined rules.

• Single-industry exposure to oil and gas
• Portfolio centered on integrated and exploration and production companies

Assets under management (AUM) stand at $485.9M, and the total expense ratio is 0.13% per year.

The main points of comparison are how far its oil and gas concentration extends relative to broad energy sector ETFs or ETFs specialized in exploration and production.

Oil and gas companies react sensitively to oil and natural gas prices and to supply policy, and they tend to be strong when oil prices rise and weak when they fall. Because the fund is concentrated in a single industry, its volatility tied to oil price moves is relatively large.

Fund flows into oil and gas stocks diverge depending on the oil price outlook, supply policy and risk appetite, and money sometimes shifts into the energy sector when expectations of higher oil prices build. It is also worth watching how performance changes with oil producer policy and the energy transition.

Clear exposure to the oil and gas industry is its strength, while single-industry concentration, oil price sensitivity and energy transition risk are points to consider.

To broaden exposure to the wider energy sector, direct substitutes include XLE and VDE, and to focus more on exploration and production companies, products such as XOP are also worth comparing. To extend the geographic reach to global energy, a global energy ETF such as IXC can also be considered. The three products shown in the table, GDX, GDXJ and SIL, are ETFs that invest in gold and silver mining companies. They fall in the same commodities category, but their underlying industry differs from oil and gas. What sets this ETF apart is its single-industry concentration, narrowed to integrated oil and gas and exploration and production companies.

Here are the points to review before investing in PBOG. The concentrated oil and gas exposure is attractive, but single-industry concentration, oil price sensitivity and energy transition risk need to be confirmed in advance. It is also a good idea to compare it with broad energy and exploration and production products.

Changes in oil and natural gas prices and in oil producer policy are the main variables for short-term performance, and because of the single-industry concentration, losses can be large during market crashes. Over the long term, the energy transition could act as a structural burden.

It is a suitable candidate for investors who want to narrow their energy exposure to the oil and gas industry. If you want broad energy exposure, compare products such as XLE and VDE, and if you want concentrated oil and gas exposure, compare this product alongside them before choosing.