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

What Are Smart Beta ETFs?

Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.

Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.

On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.

By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.

Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.

Fund Sponsor & Index

FCG is managed by First Trust Advisors, and this fund has amassed over $762.54 million, which makes 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

For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.

Annual operating expenses for this ETF are 0.59%, making it on par with most peer products in the space.

FCG's 12-month trailing dividend yield is 2.11%.

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 97.8% of the portfolio.

Looking at individual holdings, Conocophillips (COP) accounts for about 4.66% of total assets, followed by Eog Resources, Inc. (EOG) and Occidental Petroleum Corporation (OXY).

The top 10 holdings account for about 42.11% of total assets under management.

Performance and Risk

The ETF return is roughly 30.23% so far this year and was up about 39.23% in the last one year (as of 05/26/2026). In the past 52-week period, it has traded between $21.95 and $32.74

FCG has a beta of 0.49 and standard deviation of 26.70% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 41 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 $57.67 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.