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Should You Invest in the First Trust Natural Gas ETF (FCG)?
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Launched on 05/08/2007, the First Trust Natural Gas ETF (FCG - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Energy - Natural Gas segment of the equity market.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Energy - Natural Gas is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 1, placing it in top 6%.
Index Details
The fund is sponsored by First Trust Advisors. It has amassed assets over $1.06 billion, making it one of the larger ETFs attempting to match the performance of the Energy - Natural Gas segment of the equity market. FCG seeks to match the performance of the ISE-REVERE Natural Gas Index before fees and expenses.
The ISE-Revere Natural Gas Index is an equal-weighted index comprised of exchange-listed companies that derive a substantial portion of their revenues from the exploration and production of natural gas.
Costs
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for this ETF are 0.60%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.30%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Energy sector--about 98.30% of the portfolio.
Looking at individual holdings, Occidental Petroleum Corporation (OXY - Free Report) accounts for about 4.85% of total assets, followed by Conocophillips (COP - Free Report) and Dcp Midstream, Lp .
The top 10 holdings account for about 38.43% of total assets under management.
Performance and Risk
The ETF return is roughly 65.33% so far this year and was up about 86.19% in the last one year (as of 06/13/2022). In that past 52-week period, it has traded between $12.34 and $30.82.
The ETF has a beta of 2.07 and standard deviation of 53.06% for the trailing three-year period, making it a high risk choice in the space. With about 45 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust Natural Gas ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, FCG is an excellent option for investors seeking exposure to the Energy ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
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Should You Invest in the First Trust Natural Gas ETF (FCG)?
Launched on 05/08/2007, the First Trust Natural Gas ETF (FCG - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Energy - Natural Gas segment of the equity market.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Energy - Natural Gas is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 1, placing it in top 6%.
Index Details
The fund is sponsored by First Trust Advisors. It has amassed assets over $1.06 billion, making it one of the larger ETFs attempting to match the performance of the Energy - Natural Gas segment of the equity market. FCG seeks to match the performance of the ISE-REVERE Natural Gas Index before fees and expenses.
The ISE-Revere Natural Gas Index is an equal-weighted index comprised of exchange-listed companies that derive a substantial portion of their revenues from the exploration and production of natural gas.
Costs
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for this ETF are 0.60%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.30%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Energy sector--about 98.30% of the portfolio.
Looking at individual holdings, Occidental Petroleum Corporation (OXY - Free Report) accounts for about 4.85% of total assets, followed by Conocophillips (COP - Free Report) and Dcp Midstream, Lp .
The top 10 holdings account for about 38.43% of total assets under management.
Performance and Risk
The ETF return is roughly 65.33% so far this year and was up about 86.19% in the last one year (as of 06/13/2022). In that past 52-week period, it has traded between $12.34 and $30.82.
The ETF has a beta of 2.07 and standard deviation of 53.06% for the trailing three-year period, making it a high risk choice in the space. With about 45 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust Natural Gas ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, FCG is an excellent option for investors seeking exposure to the Energy ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.