First Trust Ise-Revere Natural Gas (FCG)

[deniseann]

A Split Decision For This ETF's Holdings
Todd Shriber, ETF Professor , Benzinga Staff Writer
April 26, 2016 9:19am

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Excerpt…
Read more: http://www.benzinga.com/trading-ideas/long-ideas/16/04/7881647/a-split-decision-for-this-etfs-holdings#ixzz4791RrKG6

Thanks in large part to rebounding energy commodities, namely oil, the once downtrodden and maligned First Trust ISE Revere Natural Gas (ETF) FCG is up 5.7 percent year-to-date. That is an especially performance showing when noting the United States Natural Gas Fund, LP UNG 3.05% is off nearly 19 percent and when recalling that FCG often lags its futures-based peer.
FCG holds 39 stocks, and in order for those companies to qualify for admission to the ISE-Revere Natural Gas Index (FCG's underlying benchmark), they must “derive a substantial portion of their revenues from the exploration and production of natural gas,” according to First Trust.
Related Link: Michael Bloomberg: U.S. Can Meet Paris Climate Goals (With Or Without Supreme Court)
Honing In On FCG
Tumbling oil prices drained the financial positions of an array of mid- and small-cap shale producers, prompting scores of credit downgrades and sparking concerns over a spate of defaults. Lenders to some of the companies found in FCG are refusing to extend further credit to those firms.
In fact, some banks that lend to shale producers are tightening liquidity requirements, which could be seen as a sign these lenders don't want to be left with nothing if their borrowers go bankrupt.
However, many of FCG's member firms have significant oil exposure, such as top 10 holdings Hess Corp. HES 0.15%, Anadarko Petroleum Corporation APC 0.11% and Marathon Oil Corporation MRO 0.88%. What that means is the ETF can benefit from rising oil prices, as evidenced by its recent rally, but natural gas exposure remains a concern.