Should You Invest in the First Trust Natural Gas ETF (FCG)?
Sector ETF report for FCG
The First Trust Natural Gas ETF (FCG) was launched on 05/08/2007, and is a passively managed exchange traded fund designed to offer broad exposure to the Energy - Natural Gas segment of the equity market.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
Sector ETFs are also funds of convenience, offering many 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 11, placing it in bottom 31%.
The fund is sponsored by First Trust Advisors. It has amassed assets over $243.38 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.
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
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 2.06%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Energy sector--about 100% of the portfolio.
Looking at individual holdings, Dcp Midstream, Lp (DCP) accounts for about 4.93% of total assets, followed by Occidental Petroleum Corporation (OXY) and Western Midstream Partners Lp (WES).
The top 10 holdings account for about 43.77% of total assets under management.
Performance and Risk
The ETF has added roughly 63.02% and it's up approximately 106.82% so far this year and in the past one year (as of 09/06/2021), respectively. FCG has traded between $5.92 and $16.84 during this last 52-week period.
The ETF has a beta of 2.67 and standard deviation of 51.57% for the trailing three-year period, making it a high risk choice in the space. With about 39 holdings, it has more concentrated exposure than peers.
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 a great 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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First Trust Natural Gas ETF (FCG): ETF Research Reports
Occidental Petroleum Corporation (OXY): Free Stock Analysis Report
Western Midstream Partners, LP (WES): Free Stock Analysis Report
DCP Midstream Partners, LP (DCP): Free Stock Analysis Report
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