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Should You Invest in the First Trust Natural Gas ETF (FCG)?
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If you're interested in broad exposure to the Energy - Natural Gas segment of the equity market, look no further than the First Trust Natural Gas ETF (FCG - Free Report) , a passively managed exchange traded fund launched on 05/08/2007.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Energy - Natural Gas is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 5, placing it in top 31%.
Index Details
The fund is sponsored by First Trust Advisors. It has amassed assets over $891.57 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
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining 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 2.60%.
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 98.20% of the portfolio.
Looking at individual holdings, Western Midstream Partners Lp (WES - Free Report) accounts for about 5.12% of total assets, followed by Dcp Midstream, Lp and Hess Midstream Lp (class A) (HESM - Free Report) .
The top 10 holdings account for about 38.12% of total assets under management.
Performance and Risk
So far this year, FCG has added roughly 39.75%, and it's up approximately 48.85% in the last one year (as of 12/19/2022). During this past 52-week period, the fund has traded between $16.22 and $30.82.
The ETF has a beta of 1.98 and standard deviation of 53.87% for the trailing three-year period, making it a high risk choice in the space. With about 50 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust Natural Gas ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, FCG is an excellent option for investors seeking exposure to the Energy ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
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Should You Invest in the First Trust Natural Gas ETF (FCG)?
If you're interested in broad exposure to the Energy - Natural Gas segment of the equity market, look no further than the First Trust Natural Gas ETF (FCG - Free Report) , a passively managed exchange traded fund launched on 05/08/2007.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Energy - Natural Gas is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 5, placing it in top 31%.
Index Details
The fund is sponsored by First Trust Advisors. It has amassed assets over $891.57 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
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining 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 2.60%.
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 98.20% of the portfolio.
Looking at individual holdings, Western Midstream Partners Lp (WES - Free Report) accounts for about 5.12% of total assets, followed by Dcp Midstream, Lp and Hess Midstream Lp (class A) (HESM - Free Report) .
The top 10 holdings account for about 38.12% of total assets under management.
Performance and Risk
So far this year, FCG has added roughly 39.75%, and it's up approximately 48.85% in the last one year (as of 12/19/2022). During this past 52-week period, the fund has traded between $16.22 and $30.82.
The ETF has a beta of 1.98 and standard deviation of 53.87% for the trailing three-year period, making it a high risk choice in the space. With about 50 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust Natural Gas ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, FCG is an excellent option for investors seeking exposure to the Energy ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.