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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.
Additionally, sector ETFs offer convenient 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 $521.18 million, 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
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
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 1.47%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. 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 100% of the portfolio.
Looking at individual holdings, Western Midstream Partners Lp (WES - Free Report) accounts for about 4.75% of total assets, followed by Dcp Midstream, Lp and Conocophillips (COP - Free Report) .
The top 10 holdings account for about 40.61% of total assets under management.
Performance and Risk
The ETF has added about 13.39% and it's up approximately 91.40% so far this year and in the past one year (as of 02/08/2022), respectively. FCG has traded between $11.17 and $20.45 during this last 52-week period.
The ETF has a beta of 2.27 and standard deviation of 52.01% for the trailing three-year period, making it a high risk choice in the space. With about 44 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust Natural Gas ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, FCG is a sufficient option for those seeking exposure to the Energy ETFs area of the market. Investors might also want to consider some other ETF options in the space.
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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.
Additionally, sector ETFs offer convenient 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 $521.18 million, 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
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
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 1.47%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. 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 100% of the portfolio.
Looking at individual holdings, Western Midstream Partners Lp (WES - Free Report) accounts for about 4.75% of total assets, followed by Dcp Midstream, Lp and Conocophillips (COP - Free Report) .
The top 10 holdings account for about 40.61% of total assets under management.
Performance and Risk
The ETF has added about 13.39% and it's up approximately 91.40% so far this year and in the past one year (as of 02/08/2022), respectively. FCG has traded between $11.17 and $20.45 during this last 52-week period.
The ETF has a beta of 2.27 and standard deviation of 52.01% for the trailing three-year period, making it a high risk choice in the space. With about 44 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust Natural Gas ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, FCG is a sufficient option for those seeking exposure to the Energy ETFs area of the market. Investors might also want to consider some other ETF options in the space.