Trump Announce Establishing of US Sovereign Wealth Fund

The US President Donald Trump signed an executive order directing the Treasury and Commerce secretaries to establish a US sovereign wealth fund (SWF) on Monday and the US Congress would have to approve such a fund.

The US Government directly holds $5.7 trillion in assets. Indirectly, including through natural resource reserves, the Federal government holds a far larger sum of asset value. Once it is through, the US SWF will be the biggest such fund in the world.

In fact, 23 states within the US maintain their own funds that control in total $332 billion in assets. Among them, the Alaska Permanent Fund Corp. is the largest and holds $80.5 billion.

More than 90 countries have SWFs, which are investing surplus income in different sectors and countries for the benefit of future generations. However, the US currently runs a budget deficit and no further details were announced.

It has been the policy of the US government to maximise the stewardship of the country’s national wealth for the benefit of its citizens. To this end, it is in the interest of the American people that the Federal Government establish a SWF to promote fiscal sustainability, lessen the burden of taxes on American families and small businesses, establish economic security for future generations, and promote US economic and strategic leadership internationally.

Treasury Secretary Scott Bessent and the nominee for Commerce Secretary Howard Lutnick will submit a plan to the President within 90 days of the date of the executive order and such plan shall include recommendations for funding mechanisms, investment strategies, fund structure, and a governance model. The plan shall also include an evaluation of the legal considerations for establishing and managing such a fund, including any need for legislation.

US SWF may Buy TikTok

After signing the executive order, Trump told media persons at Oval office that it was about time the US has a SWF, which could be used to acquire TikTok. “We are going to be doing something perhaps with TikTok and perhaps not. We might put that in the SWF,” he said.

Bessent, who joined Trump at the Oval Office, said that the fund would be created in the next 12 months, calling it an issue of great strategic importance.

He said that they were going to monetise the asset side of the US balance sheet for the American people.

“We are going to put the assets to work, and I think it’s going to be very exciting. We are going to study best practices done around the world. It will be a combination of liquid assets, assets that we have in this country as we work to bring them out for the American people,” he added.

Addressing a gathering at the Economic Club of New York during his election campaign on September 5, Trump proposed the US SWF will invest in great national endeavours for the benefit of the American people.

Norway has the largest SWF, with more than $1.8 trillion in assets made $222 billion last year, driven by a large rally in tech stocks. It is followed by the China Investment Corp with $1.3 trillion. These funds are involved in global financial markets through investments in stocks, bonds and real estate, along with stakes in infrastructure and private equity.