Share-split context: A reverse split was recorded on May 2, 2016 with coefficient 0.2. A reverse split combines multiple old shares into fewer new shares and mechanically raises the quoted price per share. That mechanical increase does not restore lost investment value. The returns in this report are already split-adjusted, while reverse-split history remains a separate structural warning.

What this ETF is trying to do

The First Trust Natural Gas ETF (FCG) is designed to provide investors with exposure to the natural gas industry. It does this by investing in a variety of companies involved in the production and infrastructure of natural gas. Based on its top holdings, the fund invests in companies like ConocoPhillips (4.62%), EOG Resources Inc (4.58%), and Hess Midstream LP Class A (4.54%).

What the numbers show

The numbers for FCG show positive growth over several timeframes. Because this ETF has a history of share splits, the following returns are split-adjusted:

• Year-to-Date: The price return is 25.67%, while the total return is 27.78%.

• One Year: The price return is 23.20%, and the total return is 26.13%.

• Three Year: The price return is 18.34%, and the total return is 28.24%.

• Five Year: The total return is 89.67%.

Price return measures only the change in the share price. Total return is a broader measure that includes the distributions paid out to investors.

Income and distribution explanation

FCG provides cash distributions to its investors. It usually pays these distributions quarterly, with four payments made in the last 12 months. The distribution yield is approximately 2.24%.

It is important for beginners to remember that a distribution yield is not the same as a total return. While the yield shows the cash paid out relative to the price, it does not tell you if the overall investment grew or shrank.

NAV erosion explanation

The supplied data is sufficient to evaluate price erosion, but it does not include enough historical NAV-per-share data to confirm or rule out NAV erosion.

However, looking at price-based evidence, the fund has an erosion score of 100, and the label states "No price erosion detected." The erosion severity is listed as "good," and there is no severe erosion-risk flag.

It is also noted that FCG had a reverse split on May 2, 2016. In a reverse split, multiple old shares are combined into fewer new shares, which mechanically raises the per-share price. This mechanical increase does not restore lost investment value.

Pros

• Positive Returns: The fund has shown positive split-adjusted price and total returns over the short and long term.

• Income: It provides regular quarterly distributions.

• Low Price Erosion Risk: The erosion score indicates that no price erosion was detected.

Cons

• Reverse Split History: The fund has a history of a reverse split, which is a structural change to the share count.

• Sector Concentration: Because it focuses on natural gas, it is tied to the performance of one specific industry.

Beginner takeaway

FCG is an ETF for those who want to invest in the natural gas sector. It has provided both share-price growth and cash income over the last few years. While it has a history of a reverse split, recent data shows positive total returns and a "good" erosion-risk score.