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Should You Invest in the First Trust Natural Gas ETF (FCG)?
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If you're interested in broad exposure to the Energy - Natural Gas segment of the equity market, look no further than the First Trust Natural Gas ETF (FCG - Free Report) , a passively managed exchange traded fund launched on 05/08/2007.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Energy - Natural Gas is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 7, placing it in top 44%.
Index Details
The fund is sponsored by First Trust Advisors. It has amassed assets over $205.33 million, making it one of the average sized 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 2.37%.
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 95.30% of the portfolio.
Looking at individual holdings, Marathon Oil Corporation (MRO - Free Report) accounts for about 5.70% of total assets, followed by Diamondback Energy (FANG) and 5.27 ( Inc.).
The top 10 holdings account for about 47.34% of total assets under management.
Performance and Risk
So far this year, FCG has gained about 58.59%, and it's up approximately 221.84% in the last one year (as of 03/12/2021). During this past 52-week period, the fund has traded between $3.92 and $14.21.
The ETF has a beta of 2.73 and standard deviation of 49.60% for the trailing three-year period, making it a high risk choice in the space. With about 32 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust Natural Gas ETF sports a Zacks ETF Rank of 4 (Sell), which is based on expected asset class return, expense ratio, and momentum, among other factors. FCG, then, is not a great choice for investors seeking exposure to the Energy ETFs segment of the market. However, there are better ETFs in the space to consider.
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Should You Invest in the First Trust Natural Gas ETF (FCG)?
If you're interested in broad exposure to the Energy - Natural Gas segment of the equity market, look no further than the First Trust Natural Gas ETF (FCG - Free Report) , a passively managed exchange traded fund launched on 05/08/2007.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Energy - Natural Gas is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 7, placing it in top 44%.
Index Details
The fund is sponsored by First Trust Advisors. It has amassed assets over $205.33 million, making it one of the average sized 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 2.37%.
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 95.30% of the portfolio.
Looking at individual holdings, Marathon Oil Corporation (MRO - Free Report) accounts for about 5.70% of total assets, followed by Diamondback Energy (FANG) and 5.27 ( Inc.).
The top 10 holdings account for about 47.34% of total assets under management.
Performance and Risk
So far this year, FCG has gained about 58.59%, and it's up approximately 221.84% in the last one year (as of 03/12/2021). During this past 52-week period, the fund has traded between $3.92 and $14.21.
The ETF has a beta of 2.73 and standard deviation of 49.60% for the trailing three-year period, making it a high risk choice in the space. With about 32 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust Natural Gas ETF sports a Zacks ETF Rank of 4 (Sell), which is based on expected asset class return, expense ratio, and momentum, among other factors. FCG, then, is not a great choice for investors seeking exposure to the Energy ETFs segment of the market. However, there are better ETFs in the space to consider.