How a U.S. sovereign wealth fund could be structured and funded

President Donald Trump wants to create a U.S. sovereign wealth fund, but launching such a fund will require intense planning, likely congressional approval and tackling complicated questions around governance, funding and asset allocation, experts said.

“Any country can set up a sovereign fund, really, but its success and long-term resilience will be highly dependent on sound governance, strong fiscal rules and aligned investment mandate and decisions,” said Diego López, founder and managing director of Global SWF, a consultancy and data provider focused on sovereign wealth funds and public pension funds.

Trump on Feb. 3 signed an executive order directing the Treasury and Commerce secretaries to jointly submit a plan to the president within 90 days that includes recommendations for funding mechanisms, investment strategies, fund structure and a governance model.

The order says that it’s in the interest of the American people for the federal government to establish a U.S. sovereign wealth fund to “promote fiscal sustainability, lessen the burden of taxes on American families and small businesses, establish economic security for future generations, and promote United States economic and strategic leadership internationally.”

Trump floated that the fund could be used to acquire a stake in TikTok, the social media platform owned by Chinese company ByteDance.

Several U.S. states already have sovereign wealth funds — government-controlled investment funds that enable excess capital to be invested — including those backed by energy and mineral resources, such as the $80.5 billion Alaska Permanent Fund Corp., Juneau, the largest in the U.S.

Countries with significant commodity exports such as Norway, China, Saudi Arabia and Kuwait also have massive sovereign wealth funds, with trillions of dollars in assets among the group.

Sovereign wealth funds generally are created out of budget surpluses or revenues from natural resources, like oil.

However, the U.S. is $36 trillion in debt.

"Unlike the beginnings of many SWFs, the US federal government is not starting with a budget surplus and that may create some pushback in Congress and across other stakeholders,” said Zeeshan Ahmedani, partner at law firm A&O Shearman.

But several sovereign wealth fund experts said it still makes sense for the U.S. to establish such a fund.

“Every single large economy has a sovereign wealth fund and they’ve been strategic tools for decades,” said Salar Ghahramani, founder and managing director of Global Policy Advisors, a firm that advises asset managers and corporations on compliance with financial policy. “So it would make absolute sense for the U.S. to have at least one sovereign wealth fund given the size of the U.S. economy.”

Of note, the United Kingdom launched a sovereign wealth fund in 2024 and Germany is also studying the idea.

Treasury Secretary Scott Bessent, who joined Trump in the Oval Office, said the U.S. fund would be created in the next 12 months, calling it an issue “of great strategic importance.”

"We're going to monetize the asset side of the U.S. balance sheet for the American people," Bessent added. "We're going to put the assets to work, and I think it's going to be very exciting. We're going to study best practices done around the world.”

Winston Ma, adjunct law professor at New York University and executive director of the university’s Global Public Investment Funds Forum, which analyzes public asset owners, pointed to Norway’s sovereign wealth fund as a model the U.S. could follow.

Government Pension Fund Global, Oslo, the world’s largest sovereign wealth fund with $1.8 trillion in assets, is very transparent, issuing mandated public financial reports and partaking in public policy discussions with lawmakers, Ma said.

Crafting a proper governance structure will be crucial, sources said.

“The United States, given its complex political landscape and the necessity to align its financial strategies with diplomatic priorities, would require a governance structure that accommodates both economic expertise and foreign policy considerations,” Ghahramani wrote in an article published in December in the Yale Journal of International Affairs.

Designing a governance model raises questions about how much independence the sovereign wealth fund should have and how much government oversight is needed to align the sovereign wealth fund’s activities with U.S. strategic priorities, according to Ghahramani.

“Striking this balance is crucial for ensuring the fund can function efficiently while advancing national interests,” he wrote. “The governance structure must provide enough autonomy to allow financial experts to make sound investment decisions, but it also needs safeguards to ensure these decisions reflect the country’s foreign policy and economic goals.”

When it comes to asset allocation, Ghahramani wondered if the framework would put limits on how and where the fund’s assets can be allocated.

“Good sovereign wealth funds, just like any good investor, will try to diversify across asset classes, geographies and even money managers,” Ghahramani added.

Typically, sovereign wealth funds invest their assets with private equity and hedge fund managers, Ghahramani noted. If and when a federal fund is established, seeing which managers win the bid(s) to manage its assets will be interesting, he added.

As for funding a U.S. sovereign wealth fund, there a few options, Ahmedani said.

Those include revenues from from various sources, including tariffs — Trump’s executive order was signed on the same day he issued a 30-day pause on Canadian and Mexican import tariffs and the day prior to allowing additional tariffs on Chinese imports to take effect — and using the Federal Reserve’s assets, he added.

Also, the Trump administration’s quest to downsize the federal government could result in additional funds being available, Ahmedani said, though the creation of a U.S. sovereign wealth fund is almost antithetical to that concept.

“We’re at moment where a lot of government agencies are proposed to be shut down and the number of employees within the federal government are intended to be downsized, the intent is to downsize, (but) at the same time we’re talking about creating is effectively a new arm of the federal government,” Ahmedani said.

“How does that work? What government agency does it sit under? Is it an independent government agency? Who does it report to? How does it interact with the Fed?" he asked. "These are the types of things that will generate commentary within the halls of government.”

Those are some of the questions Trump has tasked his Treasury and Commerce secretaries to tackle, but experts contend that a U.S. sovereign wealth fund’s creation will ultimately need congressional approval.

Trump, through the order, may be laying the groundwork to test that theory, though.

The plan Trump has directed officials to draw up will also include an “evaluation of the legal considerations for establishing and managing such a fund, including any need for legislation.”

If Trump were to move forward without Congress, he would certainly face a legal challenge, Ahmedani said.