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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.
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.
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 14, placing it in bottom 13%.
Index Details
The fund is sponsored by First Trust Advisors. It has amassed assets over $558.57 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 3.48%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Energy sector--about 98.40% of the portfolio.
Looking at individual holdings, Hess Midstream Lp (class A) (HESM - Free Report) accounts for about 4.56% of total assets, followed by Western Midstream Partners Lp (WES - Free Report) and Conocophillips (COP - Free Report) .
The top 10 holdings account for about 34.99% of total assets under management.
Performance and Risk
So far this year, FCG has gained about 6.98%, and is down about -2.53% in the last one year (as of 08/28/2023). During this past 52-week period, the fund has traded between $20.73 and $28.53.
The ETF has a beta of 1.97 and standard deviation of 42.76% 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 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 suitable 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)?
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.
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.
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 14, placing it in bottom 13%.
Index Details
The fund is sponsored by First Trust Advisors. It has amassed assets over $558.57 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 3.48%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Energy sector--about 98.40% of the portfolio.
Looking at individual holdings, Hess Midstream Lp (class A) (HESM - Free Report) accounts for about 4.56% of total assets, followed by Western Midstream Partners Lp (WES - Free Report) and Conocophillips (COP - Free Report) .
The top 10 holdings account for about 34.99% of total assets under management.
Performance and Risk
So far this year, FCG has gained about 6.98%, and is down about -2.53% in the last one year (as of 08/28/2023). During this past 52-week period, the fund has traded between $20.73 and $28.53.
The ETF has a beta of 1.97 and standard deviation of 42.76% 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 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 suitable option for investors seeking exposure to the Energy ETFs segment of the market. Instead, there are better ETFs in the space to consider.