Is First Trust Natural Gas ETF (FCG) a Strong ETF Right Now?

Designed to provide broad exposure to the Energy ETFs category of the market, the First Trust Natural Gas ETF (FCG) is a smart beta exchange traded fund launched on 05/08/2007.

What Are Smart Beta ETFs?

The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.

Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.

On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.

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.

While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.

Fund Sponsor & Index

The fund is managed by First Trust Advisors. FCG has been able to amass assets over $349.35 million, making it one of the average sized ETFs in the Energy ETFs. FCG, 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

When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.

With on par with most peer products in the space, this ETF has annual operating expenses of 0.57%.

It has a 12-month trailing dividend yield of 2.77%.

Sector Exposure and Top Holdings

Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.

FCG's heaviest allocation is in the Energy sector, which is about 97.6% of the portfolio.

Taking into account individual holdings, Eqt Corporation (EQT) accounts for about 4.8% of the fund's total assets, followed by Expand Energy Corporation (EXE) and Western Midstream Partners Lp (WES).

Its top 10 holdings account for approximately 43.36% of FCG's total assets under management.

Performance and Risk

Year-to-date, the First Trust Natural Gas ETF has lost about -1.41% so far, and is down about -8.13% over the last 12 months (as of 07/14/2025). FCG has traded between $19.37 and $27.24 in this past 52-week period.

The fund has a beta of 0.89 and standard deviation of 30.27% for the trailing three-year period, which makes FCG a high risk choice in this particular space. With about 41 holdings, it has more concentrated exposure than peers .

Alternatives

First Trust Natural Gas ETF is a reasonable option for investors seeking to outperform the Energy ETFs segment of the market. However, there are other ETFs in the space which investors could consider.

() tracks The fund has $0 million in assets. has an expense ratio of %.

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

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This article originally published on Zacks Investment Research (zacks.com).

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