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Is First Trust Natural Gas ETF (FCG) a Strong ETF Right Now?
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The First Trust Natural Gas ETF (FCG - Free Report) made its debut on 05/08/2007, and is a smart beta exchange traded fund that provides broad exposure to the Energy ETFs category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
FCG is managed by First Trust Advisors, and this fund has amassed over $539.31 million, which makes it one of the larger ETFs in the Energy ETFs. Before fees and expenses, this particular fund seeks to match the performance of the ISE-REVERE Natural Gas Index.
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.
Cost & Other Expenses
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.
FCG's 12-month trailing dividend yield is 1.53%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
For FCG, it has heaviest allocation in the Energy sector --about 100% of the portfolio.
Taking into account individual holdings, Conocophillips (COP - Free Report) accounts for about 4.57% of the fund's total assets, followed by Devon Energy Corporation (DVN - Free Report) and Eog Resources, Inc. (EOG - Free Report) .
Its top 10 holdings account for approximately 42.76% of FCG's total assets under management.
Performance and Risk
The ETF return is roughly 117.36% and was up about 227.08% so far this year and in the past one year (as of 11/09/2021), respectively. FCG has traded between $6.85 and $19.33 during this last 52-week period.
The ETF has a beta of 2.45 and standard deviation of 52.01% for the trailing three-year period, making it a high risk choice in the space. With about 41 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust Natural Gas ETF is an excellent option for investors seeking to outperform the Energy ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
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Is First Trust Natural Gas ETF (FCG) a Strong ETF Right Now?
The First Trust Natural Gas ETF (FCG - Free Report) made its debut on 05/08/2007, and is a smart beta exchange traded fund that provides broad exposure to the Energy ETFs category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
FCG is managed by First Trust Advisors, and this fund has amassed over $539.31 million, which makes it one of the larger ETFs in the Energy ETFs. Before fees and expenses, this particular fund seeks to match the performance of the ISE-REVERE Natural Gas Index.
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.
Cost & Other Expenses
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.
FCG's 12-month trailing dividend yield is 1.53%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
For FCG, it has heaviest allocation in the Energy sector --about 100% of the portfolio.
Taking into account individual holdings, Conocophillips (COP - Free Report) accounts for about 4.57% of the fund's total assets, followed by Devon Energy Corporation (DVN - Free Report) and Eog Resources, Inc. (EOG - Free Report) .
Its top 10 holdings account for approximately 42.76% of FCG's total assets under management.
Performance and Risk
The ETF return is roughly 117.36% and was up about 227.08% so far this year and in the past one year (as of 11/09/2021), respectively. FCG has traded between $6.85 and $19.33 during this last 52-week period.
The ETF has a beta of 2.45 and standard deviation of 52.01% for the trailing three-year period, making it a high risk choice in the space. With about 41 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust Natural Gas ETF is an excellent option for investors seeking to outperform the Energy ETFs segment of the market. There are other ETFs in the space which investors could consider as well.