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Should You Invest in the First Trust Natural Gas ETF (FCG)?
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The First Trust Natural Gas ETF (FCG - Free Report) was launched on 05/08/2007, and is a passively managed exchange traded fund designed to offer 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.
Investor-friendly, sector ETFs provide many options 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 12, placing it in bottom 25%.
Index Details
The fund is sponsored by First Trust Advisors. It has amassed assets over $649.73 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 3.23%.
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 98.30% of the portfolio.
Looking at individual holdings, Dcp Midstream, Lp accounts for about 5.16% of total assets, followed by Western Midstream Partners Lp (WES - Free Report) and Hess Midstream Lp (class A) (HESM - Free Report) .
The top 10 holdings account for about 39.14% of total assets under management.
Performance and Risk
The ETF has lost about -6% and was up about 18.68% so far this year and in the past one year (as of 02/21/2023), respectively. FCG has traded between $19.61 and $30.82 during this last 52-week period.
The ETF has a beta of 1.97 and standard deviation of 53.90% for the trailing three-year period, making it a high risk choice in the space. With about 52 holdings, it effectively diversifies company-specific risk.
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)?
The First Trust Natural Gas ETF (FCG - Free Report) was launched on 05/08/2007, and is a passively managed exchange traded fund designed to offer 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.
Investor-friendly, sector ETFs provide many options 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 12, placing it in bottom 25%.
Index Details
The fund is sponsored by First Trust Advisors. It has amassed assets over $649.73 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 3.23%.
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 98.30% of the portfolio.
Looking at individual holdings, Dcp Midstream, Lp accounts for about 5.16% of total assets, followed by Western Midstream Partners Lp (WES - Free Report) and Hess Midstream Lp (class A) (HESM - Free Report) .
The top 10 holdings account for about 39.14% of total assets under management.
Performance and Risk
The ETF has lost about -6% and was up about 18.68% so far this year and in the past one year (as of 02/21/2023), respectively. FCG has traded between $19.61 and $30.82 during this last 52-week period.
The ETF has a beta of 1.97 and standard deviation of 53.90% for the trailing three-year period, making it a high risk choice in the space. With about 52 holdings, it effectively diversifies company-specific risk.
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.