On Monday, February 3rd, President Trump signed an executive order requiring the Treasury Department and the Department of Commerce to establish the United States Sovereign Wealth Fund (SWF). The nature, sources of funding, purpose of establishment, and potential uses of such funds were introduced and organized by Reuters.
Sovereign wealth funds are investment tools owned by nations, typically used for investment accounts or development tools, and may serve both purposes. The establishment of these funds aims to reserve funds and utilize a country’s existing resources for the benefit of future generations.
Unlike individual retirement funds used for personal expenses, the investment goal of sovereign wealth funds is for the collective interest of the entire nation.
This may include funding for airport or school construction, but sovereign wealth funds also often invest in financial products or purchase company shares to provide financial returns in the future, thereby supporting government budgets or social programs.
According to data from the International Forum of Sovereign Wealth Funds (IFSWF), there are currently over 90 sovereign wealth funds worldwide, managing total assets exceeding $8 trillion.
The funding source for SWFs is typically a country’s entire or partial budget surplus, used for new investments. However, the United States has been facing budget deficits in recent years, meaning the government lacks direct surplus for allocation.
Many countries’ sovereign wealth funds rely on income from the export of commodities, such as revenue from state-owned enterprises selling oil, natural gas, metals, and minerals. According to IFSWF data, approximately 60% of these funds are primarily supported by natural resource income.
President Trump did not elaborate on how the United States Sovereign Wealth Fund will operate or its funding source. However, he previously mentioned that tariff revenues collected on imported goods could become a funding source for the SWF.
U.S. Treasury Secretary Scott Bessent told reporters that the purpose of establishing the sovereign wealth fund is to utilize government assets to “benefit the American people.”
During his campaign last September, Trump proposed establishing a sovereign wealth fund to provide funding for the “Great National Plan,” such as building infrastructure like roads and airports, developing the manufacturing industry, and investing in medical research.
Bessent now states that the United States Sovereign Wealth Fund will be established within 12 months.
On Tuesday, Trump did not reveal the initial scale or target amount of the SWF, but when he mentioned this issue in September last year, he suggested that the size of the U.S. sovereign wealth fund should be close to or exceed $2 trillion.
According to the Sovereign Wealth Fund Institute, the current largest sovereign fund globally is the Government Pension Fund Global (GPFG) of Norway, with total assets reaching $1.74 trillion.
Additionally, the sovereign wealth funds of countries like Abu Dhabi, Kuwait, Saudi Arabia, and Singapore range in size between $801 billion and $1.06 trillion.