FMG Mongolia Fund lost 3.2% in April

May (FMG) The Fund started to invest its cash during the month. The model portfolio now consists of 10 stocks and the mining sector makes up about 43%, followed by consumer stocks 39%, construction 10%, finance and real estate at 4% each.

The fund has only bought MSE (domestic) listed stocks in Mongolia. The benefit of our small fund by assets is that we can establish positions among the most attractive domestic growth stories in Mongolia before larger pools of foreign money can enter the market. Mongolia grabs more and more headlines as we saw the huge mining company, Rio Tinto, take over Ivanhoe that possess huge cobber and coal mining rights in Mongolia. The Chinese have also been trying to buy Mongolian mines outright this month, but the Mongolian Government wants to retain control, at least for now.

Nobody can compete with the cost-advantage Mongolia has of being located right next door to China, the number one consumer of commodities.

Some recent examples from Mongolia:

· China opens a new power plant every week where coal is the source for producing the energy.

· Mongolia has 17% of the World's supply of rare earth metals.

· In Ulanbaatar one restaurant group has seen turnover increase by 800% in a year!

· The Mongolian government is planning to set up a new $600m sovereign wealth

· A Fund, to be launched in July, after the June elections have taken place, Bloomberg reported. The new fund will be used to finance pensions, Also plans to increase the size of its existing stabilization fund from $300m to $500m.

· The Mongolia Stock Exchange will be modernized with the help of the London Stock Exchange team currently on the ground in Ulanbaatar.

FMG Mongolia Fund has just been launched The monthly fund commentary will start being updated here from mid-April onwards.