Explaining Trump’s Idea for a U.S. Sovereign Wealth Fund

On his first day in office in 2025, President Trump signed many executive orders. One of them was an order to create a sovereign wealth fund (SWF) for the United States. This article explains a sovereign wealth fund and if establishing one a good idea.  

What is a Sovereign Wealth Fund? 

When you put your money in a savings account at a bank, the money doesn’t just sit there. The bank invests the money in different “assets,” such as stocks, bonds, or real estate. The bank is using your money to make more money for itself. And you are given interest payments as a reward for providing your money as investment funds. 

A sovereign wealth fund (SWF) is a similar concept. It’s a pool of money controlled by the federal government. Instead of just saving the money, the government invests it with the goal of earning more money. The government then uses the funds it earns to pay for government programs that people need. In other words, it’s a government-owned investment fund. 

Several countries already have well-established SWF’s. Many countries that use SWFs are rich in nonrenewable natural resources, such as oil. They sell those resources to other countries in order to earn money to support their economy and pay for programs that their citizens need. Norway has the largest sovereign wealth fund in the world, worth about $325,000 per citizen. ($1.8 trillion, as of January 2025. These funds change in value frequently.) China, Saudi Arabia, Australia, Iran, and Russia all have large sovereign wealth funds as well. In the United States, Alaska and Texas do the same thing on the state level. 

What Did Trump Order? 

In this executive order of February 3, 2025, Trump announced that Commerce Secretary will be responsible for setting up the fund. The Secretary of Commerce and a committee has 90 days to outline a plan for establishing a United States SWF. 

What Does the Committee Need to Consider? 

Many countries already have successful SWFs that generate enough money to fund important services for their citizens that might be impossible to pay for otherwise. How might such a wealth fund be set up in the United States? 

The management of a SWF must be completely open and transparent to the public. The International Monetary Fund, or IMF, has drawn up a list of best practices for how to manage and structure a SWF, as well as the best ways to be transparent and accountable. This sixty-page list is called the Santiago Principles. So far, there has been no further details from the White House about how a SWF would be governed. 

Another key requirement of a healthy SWF is that it should be clear what problem the money will be used to solve–such as climate change research or infrastructure maintenance and new construction, for example. The White House hasn’t yet announced what potential goal such a SWF could support.  

It’s also unclear where the money for such a fund would come from. Sovereign wealth funds are paid for with a country’s budgetary surpluses (extra money), which the U.S. doesn’t have. More details on the investments providing the money for the fund needs to be explained. And details on how the fund will be managed will be required. Such details are likely being discussed by the committee investigating the SWF’s possibility.  

Dig Deeper The International Monetary Fund, or IMF, is one of the oldest and largest SWF’s. Use Internet resources to learn more about the IMF. Write a paragraph explaining what you find.