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) is a passively managed exchange traded fund launched on May 8, 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.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 7, placing it in top 44%.Index DetailsThe fund is sponsored by First Trust Advisors. It has amassed assets over $407.62 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.CostsCost 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 0.57%, making it on par with most peer products in the space.It has a 12-month trailing dividend yield of 2.64%.Sector Exposure and Top HoldingsETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.This ETF 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).The top 10 holdings account for about 42.41% of total assets under management.Performance and RiskThe ETF has lost about 1.89% so far this year and is down about 7.77% in the last one year (as of 11/24/2025). In that past 52-week period, it has traded between $19.37 and $27.09.The ETF has a beta of 0.86 and standard deviation of 27.72% 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.AlternativesFirst Trust Natural Gas ETF sports a Zacks ETF Rank of 5 (Strong Sell), which is based on expected asset class return, expense ratio, and momentum, among other factors. FCG, then, is not a suitable option for investors seeking exposure to the Energy ETFs segment of the market. However, there are better ETFs in the space to consider.Global X U.S. Natural Gas ETF (LNGX) tracks GLOBAL X U.S. NATURAL GAS INDEX. The fund has $2.52 million in assets. LNGX has an expense ratio of 0.45%.Bottom LineTo learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.Boost Your Portfolio with Our Top ETF InsightsZacks' exclusive Fund Newsletter delivers actionable information, top news and analysis, as well as top-performing ETFs, straight to your inbox every week.Don’t miss out on this valuable resource. It’s free!Get it now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report First Trust Natural Gas ETF (FCG): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks