U.S. Proposes a Sovereign Wealth Fund: What That Means for the Country

The United States may soon take a big step into global financial strategy by creating its first-ever sovereign wealth fund. On February 3, President Donald Trump issued an executive order directing the U.S. Treasury and Commerce Departments to create a proposal within 90 days outlining how such a fund could work, according to Reuters.

But what exactly is a sovereign wealth fund—and what would it mean for the American economy?

A sovereign wealth fund is a government-owned investment fund. These funds are typically created using money from budget surpluses or natural resource revenues, such as oil or gas profits. The idea is to invest that money in things like real estate, stocks, infrastructure, or other long-term projects that grow in value over time.

According to The New York Times, more than 90 countries already use sovereign wealth funds. These countries often use the investment returns to support public services, fund national projects, or prepare for economic emergencies. Popular examples include wealth funds in Norway, Singapore, Saudi Arabia, and the United Arab Emirates.

Here in the U.S., a few individual states have their own versions. Alaska, for example, uses oil revenues to support its Permanent Fund, which even pays yearly dividends to residents. Texas has similar funds to support public education. But at the national level, the U.S. has never had one—until now, possibly.

What’s the benefit?

Supporters of the idea say a national fund could be a smart way to strengthen the country’s financial security and global influence. According to the Wilson Center, a sovereign wealth fund could provide stable funding for important projects like infrastructure improvements, supply chain upgrades, and advanced technology development. These are areas where steady, long-term investment could make a big difference in boosting the country’s competitiveness.

Such a fund could also help reduce the government’s reliance on borrowing or foreign investment. If the fund earns money from smart investments, it could help balance budgets and support economic growth.

What are the risks?

But not everyone is convinced. Critics say a fund like this could lead to serious problems without proper oversight. One big concern is transparency. Without strong rules and independent watchdogs, there’s a risk that money could be misused or go missing.

The U.S. Department of Justice pointed to a major example from 2016: the mismanagement of Malaysia’s sovereign wealth fund, known as 1MDB. In what the DOJ called the “largest kleptocracy case to date,” about $3.5 billion was stolen, and over $1 billion was reportedly funneled into the bank accounts of Malaysia’s former prime minister, according to the Carnegie Endowment for International Peace.

At home, the Cato Institute warns that a U.S. sovereign wealth fund could become a new battleground for partisan politics, with lawmakers fighting over how it should be managed and what it should invest in.

What would the U.S. invest in?

That’s one of the biggest unanswered questions. Unlike many countries with wealth funds, the U.S. does not run a budget surplus or earn huge revenues from exporting natural resources. So where would the money come from?

President Trump suggested that if the U.S. were to take ownership of part of TikTok, that could provide seed funding. But no official source of funding has been confirmed yet.

One thing is certain: even if the executive branch creates a plan, Congress must approve the fund. Lawmakers can choose to follow the proposed plan—or build their own version with different priorities.

For now, the idea is just a proposal. But if it moves forward, it could mark a major shift in how the U.S. government manages and invests public money—bringing opportunities, risks, and plenty of debate.