The American Sovereign Wealth Fund or the United States Sovereign Wealth Fund may see the light of the day soon. On February 3, 2025, President Donald Trump issued an executive order establishing a sovereign wealth fund.
A sovereign wealth fund is a state-owned investment vehicle that invests federal funds in income-generating assets to help diversify countries economies. International Forum of Sovereign Wealth Funds defines sovereign wealth funds as having three key characteristics:
A sovereign wealth fund is owned by the general government, which includes both central government and sub-national governments. Such a fund includes investments in foreign financial assets and they need to invest for financial objectives.
These key elements exclude Public pension funds, which are ultimately owned by the underlying policyholders and Central bank reserve assets, which are not invested.
The Executive Order directs the Secretary of the Treasury and the Secretary of Commerce to deliver a plan within 90 days for the creation of a sovereign wealth fund. The Order directs the Secretary to include in the plan recommendations for funding mechanisms, investment strategies, fund structure, and a governance model.
The United States can leverage such returns to promote fiscal sustainability, lessen the burden of taxes on American families and small businesses, establish long-term economic security, and promote U.S. economic and strategic leadership internationally – reads the Order.
The United States already holds a vast sum of highly valued assets that can be invested through a sovereign wealth fund for greater long-term wealth generation. The Federal government directly holds $5.7 trillion in assets. Indirectly, including through natural resource reserves, the Federal government holds a far larger sum of asset value.
In addition to countries around the world maintaining their funds, 23 states within our own country maintain their own funds that control in total $332 billion in assets.
The U.S., despite being one of the world’s largest and most diverse economies, is currently facing a deficit.
President Trump has called for a sovereign wealth fund to ensure the United States can lead the way in long-term wealth generation.
Sovereign wealth funds are global entities that enhance a nation’s financial returns and use these returns for strategic purposes. The United Kingdom recently announced their own plans to pursue development of such a fund.
Norway has the world’s largest sovereign wealth fund, which invests in oil and gas income and foreign shares to pay a portion of the government budget. Other major sovereign wealth funds include the United Arab Emirates, Saudi Arabia, and China.