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Should You Invest in the First Trust Natural Gas ETF (FCG)?
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Looking for broad exposure to the Energy - Natural Gas segment of the equity market? You should consider the First Trust Natural Gas ETF (FCG - Free Report) , a passively managed exchange traded fund launched on 05/08/2007.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
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 15, placing it in bottom 6%.
Index Details
The fund is sponsored by First Trust Advisors. It has amassed assets over $494.80 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
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are 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 4%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Energy sector--about 98.50% of the portfolio.
Looking at individual holdings, Hess Midstream Lp (class A) (HESM - Free Report) accounts for about 4.87% of total assets, followed by Western Midstream Partners Lp (WES - Free Report) and Occidental Petroleum Corporation (OXY - Free Report) .
The top 10 holdings account for about 38.64% of total assets under management.
Performance and Risk
The ETF has lost about -6.73% and is up roughly 1.51% so far this year and in the past one year (as of 06/28/2023), respectively. FCG has traded between $20.41 and $28.53 during this last 52-week period.
The ETF has a beta of 1.97 and standard deviation of 43.57% for the trailing three-year period, making it a high risk choice in the space. With about 49 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 the best option for investors seeking exposure to the Energy ETFs segment of the market. Instead, there are better ETFs in the space to consider.
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Should You Invest in the First Trust Natural Gas ETF (FCG)?
Looking for broad exposure to the Energy - Natural Gas segment of the equity market? You should consider the First Trust Natural Gas ETF (FCG - Free Report) , a passively managed exchange traded fund launched on 05/08/2007.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
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 15, placing it in bottom 6%.
Index Details
The fund is sponsored by First Trust Advisors. It has amassed assets over $494.80 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
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are 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 4%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Energy sector--about 98.50% of the portfolio.
Looking at individual holdings, Hess Midstream Lp (class A) (HESM - Free Report) accounts for about 4.87% of total assets, followed by Western Midstream Partners Lp (WES - Free Report) and Occidental Petroleum Corporation (OXY - Free Report) .
The top 10 holdings account for about 38.64% of total assets under management.
Performance and Risk
The ETF has lost about -6.73% and is up roughly 1.51% so far this year and in the past one year (as of 06/28/2023), respectively. FCG has traded between $20.41 and $28.53 during this last 52-week period.
The ETF has a beta of 1.97 and standard deviation of 43.57% for the trailing three-year period, making it a high risk choice in the space. With about 49 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 the best option for investors seeking exposure to the Energy ETFs segment of the market. Instead, there are better ETFs in the space to consider.