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Should You Invest in the First Trust Natural Gas ETF (FCG)?
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Designed to provide broad exposure to the Energy - Natural Gas segment of the equity market, the First Trust Natural Gas ETF (FCG - Free Report) is a passively managed exchange traded fund launched on 05/08/2007.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds 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 15, placing it in bottom 6%.
Index Details
The fund is sponsored by First Trust Advisors. It has amassed assets over $558.30 million, making it one of the average sized 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
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 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 3.54%.
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 98.40% of the portfolio.
Looking at individual holdings, Hess Midstream Lp (class A) (HESM - Free Report) accounts for about 4.87% of total assets, followed by Western Midstream Partners Lp (WES - Free Report) and Occidental Petroleum Corporation (OXY - Free Report) .
The top 10 holdings account for about 38.64% of total assets under management.
Performance and Risk
So far this year, FCG has lost about -3.86%, and is down about -1.32% in the last one year (as of 04/25/2023). During this past 52-week period, the fund has traded between $20.41 and $30.82.
The ETF has a beta of 1.96 and standard deviation of 47.06% for the trailing three-year period, making it a high risk choice in the space. With about 49 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust Natural Gas ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, FCG is a reasonable option for those seeking exposure to the Energy ETFs area of the market. Investors might also want to consider some other ETF options in the space.
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Should You Invest in the First Trust Natural Gas ETF (FCG)?
Designed to provide broad exposure to the Energy - Natural Gas segment of the equity market, the First Trust Natural Gas ETF (FCG - Free Report) is a passively managed exchange traded fund launched on 05/08/2007.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds 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 15, placing it in bottom 6%.
Index Details
The fund is sponsored by First Trust Advisors. It has amassed assets over $558.30 million, making it one of the average sized 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
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 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 3.54%.
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 98.40% of the portfolio.
Looking at individual holdings, Hess Midstream Lp (class A) (HESM - Free Report) accounts for about 4.87% of total assets, followed by Western Midstream Partners Lp (WES - Free Report) and Occidental Petroleum Corporation (OXY - Free Report) .
The top 10 holdings account for about 38.64% of total assets under management.
Performance and Risk
So far this year, FCG has lost about -3.86%, and is down about -1.32% in the last one year (as of 04/25/2023). During this past 52-week period, the fund has traded between $20.41 and $30.82.
The ETF has a beta of 1.96 and standard deviation of 47.06% for the trailing three-year period, making it a high risk choice in the space. With about 49 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust Natural Gas ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, FCG is a reasonable option for those seeking exposure to the Energy ETFs area of the market. Investors might also want to consider some other ETF options in the space.