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?

Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.

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

However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.

Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.

Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.

Fund Sponsor & Index

FCG is managed by First Trust Advisors, and this fund has amassed over $415.21 million, which makes it one of the larger ETFs in the Energy ETFs. This particular fund, 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

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 cousins, other things remaining the same.

Annual operating expenses for this ETF are 0.57%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 2.59%.

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.

For FCG, it has heaviest allocation in the Energy sector --about 97.6% of the portfolio.

Looking at individual holdings, Eqt Corporation (EQT) accounts for about 4.92% of total assets, followed by Expand Energy Corporation (EXE) and Western Midstream Partners Lp (WES).

Its top 10 holdings account for approximately 42.41% of FCG's total assets under management.

Performance and Risk

The ETF has lost about -0.19% and is down about -3.84% so far this year and in the past one year (as of 11/19/2025), respectively. FCG has traded between $19.37 and $27.09 during this last 52-week period.

The ETF has a beta of 0.86 and standard deviation of 27.75% for the trailing three-year period, making it a high risk choice in the space. With about 42 holdings, it has more concentrated exposure than peers .

Alternatives

First Trust Natural Gas ETF is not a suitable option for investors seeking to outperform the Energy ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.

Global X U.S. Natural Gas ETF(LNGX) tracks GLOBAL X U.S. NATURAL GAS INDEX The fund has $1.45 million in assets. LNGX has an expense ratio of 0.45%.

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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