Making its debut on 05/08/2007, smart beta exchange traded fund First Trust Natural Gas ETF (FCG Quick QuoteFCG - Free Report) provides investors broad exposure to the Energy ETFs category of the market.

What Are Smart Beta ETFs?

The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.

Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.

There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.

This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.

This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.

Fund Sponsor & Index

FCG is managed by First Trust Advisors, and this fund has amassed over $482.75 million, which makes it one of the larger ETFs in the Energy ETFs. Before fees and expenses, FCG 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

When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.

With on par with most peer products in the space, this ETF has annual operating expenses of 0.57%.

FCG's 12-month trailing dividend yield is 2.75%.

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.

Representing 97.2% of the portfolio, the fund has heaviest allocation to the Energy sector.

When you look at individual holdings, Conocophillips (COP) accounts for about 5.01% of the fund's total assets, followed by Hess Midstream Lp (class A) (HESM) and Occidental Petroleum Corporation (OXY).

Its top 10 holdings account for approximately 44.47% of FCG's total assets under management.

Performance and Risk

So far this year, FCG return is roughly 4.23%, and is down about -6.14% in the last one year (as of 01/22/2026). During this past 52-week period, the fund has traded between $19.37 and $26.47.

The ETF has a beta of 0.65 and standard deviation of 27.21% for the trailing three-year period, making it a high risk choice in the space. With about 40 holdings, it has more concentrated exposure than peers .

Alternatives

First Trust Natural Gas ETF is not a suitable option for investors seeking to outperform the Energy ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.

Global X U.S. Natural Gas ETF(LNGX) tracks GLOBAL X U.S. NATURAL GAS INDEX The fund has $8.88 million in assets. LNGX has an expense ratio of 0.45%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Energy ETFs

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.