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?

For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader 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.

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

The fund is sponsored by First Trust Advisors. It has amassed assets over $667.36 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

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Annual operating expenses for FCG are 0.59%, which makes it on par with most peer products in the space.

It's 12-month trailing dividend yield comes in at 2.26%.

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.

FCG's heaviest allocation is in the Energy sector, which is about 97.5% of the portfolio.

When you look at individual holdings, Conocophillips (COP) accounts for about 4.76% of the fund's total assets, followed by Western Midstream Partners Lp (WES) and Hess Midstream Lp (class A) (HESM).

Its top 10 holdings account for approximately 41.48% of FCG's total assets under management.

Performance and Risk

The ETF return is roughly 26.84% so far this year and was up about 25.23% in the last one year (as of 09/28/2026). In the past 52-week period, it has traded between $21.95 and $32.74

FCG has a beta of 0.47 and standard deviation of 27.31% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 43 holdings, it has more concentrated exposure than peers .

Alternatives

First Trust Natural Gas ETF is an excellent option for investors seeking to outperform the Energy ETFs segment of the market. There are other ETFs in the space which investors could consider as well.

Global X U.S. Natural Gas ETF(LNGX) tracks GLOBAL X U.S. NATURAL GAS INDEX The fund has $50.47 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.