Designed to provide broad exposure to the Energy ETFs category of the market, the First Trust Natural Gas ETF (FCG Quick QuoteFCG - Free Report) is a smart beta exchange traded fund launched on 05/08/2007.

What Are Smart Beta ETFs?

The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.

Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.

But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.

These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination 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

The fund is sponsored by First Trust Advisors. It has amassed assets over $791.49 million, making it one of the larger ETFs in the Energy ETFs. This particular fund, before fees and expenses, 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.

Annual operating expenses for this ETF are 0.57%, making it on par with most peer products in the space.

The fund has a 12-month trailing dividend yield of 2.10%.

Sector Exposure and Top Holdings

Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.

Representing 97.5% of the portfolio, the fund has heaviest allocation to the Energy sector.

Taking into account individual holdings, Conocophillips (COP) accounts for about 4.99% of the fund's total assets, followed by Occidental Petroleum Corporation (OXY) and Eog Resources, Inc. (EOG).

The top 10 holdings account for about 43.91% of total assets under management.

Performance and Risk

The ETF has gained about 36.48% so far this year and is up roughly 29.55% in the last one year (as of 03/26/2026). In the past 52-week period, it has traded between $19.37 and $31.95

FCG has a beta of 0.63 and standard deviation of 26.63% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 39 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 $56.77 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.