Can the United States really build a Sovereign Wealth Fund?
2025-02-10
Category: None

President Donald Trump has recently signed an executive order proposing the creation of a U.S. sovereign wealth fund. 
The idea is simple: use government assets to generate returns, just like Norway or Saudi Arabia. 
But the US isn’t sitting on a pile of surplus oil money or trade reserves. So, how exactly would this work? And more importantly, should it?
What is a sovereign wealth fund and why does Trump want one?
A sovereign wealth fund (SWF) is a government-run investment vehicle that holds stocks, bonds, real estate, or commodities. The goal is to turn state-controlled assets into long-term financial gains.
Countries with large natural resource reserves leverage a vehicle such as a SWF to invest in global assets. 
The biggest examples are Norway with its $1.7 trillion fund, and Saudi Arabia with a $900 billion fund. 
Even small nations like Singapore ($2.1 trillion combined between GIC and Temasek) have built massive funds.
Trump’s motivation is clear. He wants the US to generate wealth from its existing assets rather than just rely on taxes and debt. In his words:
 “It’s about time that this country had a sovereign wealth fund.” 
He has even suggested that the fund could be used to buy TikTok, though the details are still vague.
This isn’t a new idea. The Biden administration also explored a similar fund to invest in critical minerals, defense, and infrastructure. 
But no president has ever pulled the trigger. But since Trump is known for his aggressive deal-making, he will want to change that.
Where would the money come from?
The biggest challenge for a US sovereign wealth fund is funding. Norway and Saudi Arabia built theirs thanks to their rich oil reserves. 
China and Singapore did it through their large trade surpluses. 
The problem with the US, however, is that it’s running a $1.8 trillion budget deficit and has a national debt of $36 trillion.
Trump has floated several ideas. One is monetising federal assets, which totals $5.7 trillion, including:
He has also suggested tariffs as a revenue stream. The idea would be to funnel money from import duties into the fund instead of spending it immediately.
Another possibility is requiring foreign companies, like TikTok, to give the US government a stake in exchange for operating in the country.
None of these are straightforward solutions. Selling government buildings isn’t easy. 
Student loans don’t generate immediate cash flow. And tariffs, while lucrative, are unpredictable and could spark trade wars.
Could this actually work?
If the US successfully builds an SWF, it could become the largest in the world overnight. The sheer scale of government-owned assets dwarfs even the biggest sovereign funds today.
State-level examples show that this can be done. Alaska’s Permanent Fund ($80 billion) is financed through oil revenues and sends direct payments to residents. 
North Dakota’s Legacy Fund ($11.5 billion) reinvests oil and gas taxes for the future.
A federal version could do the same on a national scale, funding infrastructure, debt reduction, or even direct cash payments to Americans. 
Some analysts have even suggested using it to back a universal basic income (UBI) program similar to what Alaska does.
But there’s a catch. SWFs work best when built from excess capital, not borrowed money. 
The US would need to either reallocate existing assets or find new revenue streams. If not managed well, the fund could become another political slush fund rather than a serious investment vehicle.
What are the risks?
The idea of a $6 trillion investment fund sounds good, but execution is everything. The biggest risks are political interference, poor investment decisions, and lack of oversight.
Many sovereign wealth funds operate independently to avoid political influence. Norway’s fund, for example, is run by professional managers who follow strict rules to avoid risky bets.
A US fund, however, would be deeply tied to Washington. If politicians start using it for pet projects, bailouts, or politically motivated investments, it could become a liability instead of an asset.
There’s also the risk of the government picking winners and losers. If the US government starts buying stakes in private companies, it raises ethical and legal concerns. 
Would taxpayers want their money invested in a controversial tech firm like TikTok? What about fossil fuels? Big Pharma? A Bitcoin strategic reserve?
Then there’s the global reaction. Countries with existing SWFs, like China and Saudi Arabia, use them as strategic vehicles by investing in industries that give them geopolitical influence.
If the US follows suit, could this trigger investment wars between nations?
A bold idea with an uncertain future
Trump’s sovereign wealth fund proposal is ambitious, unconventional, and full of risks. 
If structured well, it could be a powerful financial tool that helps America manage its wealth more effectively. 
If mishandled, it could become another source of government waste and mismanagement.
The next 90 days will be critical. Treasury and Commerce officials must outline a clear plan that addresses how the fund will be financed, who will oversee it, and what its long-term investment strategy will be.
If done right, this could be one of the biggest financial moves in US history. If done wrong, it could just be another political talking point that fades away.