Should You Invest in the First Trust Natural Gas ETF (FCG)?
Sector ETF report for FCG
Designed to provide broad exposure to the Energy - Natural Gas segment of the equity market, the First Trust Natural Gas ETF (FCG) is a passively managed exchange traded fund launched on 05/08/2007.
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 also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Energy - Natural Gas is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 4, placing it in top 25%.
The fund is sponsored by First Trust Advisors. It has amassed assets over $473.09 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.
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are 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 1.65%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. 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, Conocophillips (COP) accounts for about 4.57% of total assets, followed by Devon Energy Corporation (DVN) and Eog Resources, Inc. (EOG).
The top 10 holdings account for about 42.76% of total assets under management.
Performance and Risk
The ETF has gained about 101.62% and was up about 101.27% so far this year and in the past one year (as of 12/08/2021), respectively. FCG has traded between $8.64 and $19.33 during this last 52-week period.
The ETF has a beta of 2.44 and standard deviation of 52.28% for the trailing three-year period, making it a high risk choice in the space. With about 41 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
Devon Energy Corporation (DVN): Free Stock Analysis Report
ConocoPhillips (COP): Free Stock Analysis Report
EOG Resources, Inc. (EOG): Free Stock Analysis Report
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