All the talk about tariffs has overshadowed one of the president's most enlightened proposals — the creation of a U.S. sovereign wealth fund.
On Feb. 3, President Trump signed an executive order to “establish a 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.”
It is an idea whose time has come.
Today, there are over 90 sovereign wealth funds worldwide, collectively managing and investing assets exceeding $12 trillion as of June 2024. This amount has grown significantly over the past two decades, reflecting the increasing importance of sovereign wealth funds in the global economy.
And yet the U.S., the world's most dominant economic power, is not among them.
While there may be many reasons for this situation, the rationale for creating a U.S. sovereign wealth fund now could not be clearer. Harnessing the inherent wealth of America's assets into an acquisitive global investment vehicle seems prudent, and the economic and geopolitical conditions appear ripe.
But it took Trump, the consummate businessman — perhaps with the counsel of Jared Kushner and a few private equity players — to translate theory into reality.
Of course, Kushner himself appreciates the significance of sovereign wealth investments, due in large part to a generous $2 billion deal he brokered with Saudi Arabia's Public Investment Fund. In fact, we all marvel at the financial prowess of the Saudi fund: With investments in every sector imaginable, it provides an illustrative model for how to cast a nation's economic wealth into global power and influence. This came into full view when the fund, among other major investments, made a play to acquire the Professional Golfers' Association wholesale.
Interestingly, we hear much less about other sovereign wealth funds that are even larger than the Saudi one.
For example, Norway’s, Government Pension Fund Global is the world’s largest sovereign wealth fund, with $1.7 trillion under management. It is followed by the China Investment Corporation, with $1.3 trillion; the Abu Dhabi Investment Authority, with $1 trillion; the Kuwait Investment Authority, with $1 trillion; and the Public Investment Fund of Saudi Arabia, with over $980 billion under management, according to the Sovereign Wealth Fund Institute.
Sovereign wealth funds are state-owned investment funds that manage national assets that have traditionally been funded via excess reserves from trade surpluses, natural resource exports (such as oil and gas), or foreign currency reserves accumulated by central banks. Their role in global finance has grown in stature and effect to become some of the most powerful and influential financial entities in the world.
With investments spanning every asset class, from stocks, bonds, real estate, infrastructure, energy, oil and gas, media, tech and emerging industries (including artificial intelligence), these funds own and control significant resources in industrialized nations.
Despite the strength of the U.S. economy, we have traditionally relied on private investment funds, pension funds and venture capital rather than a centralized sovereign wealth fund for national and global investment.
But the U.S. is at an historic crossroad where its international alliances and economic relations are realigning. And that may be the factual predicate to create and sustain the nation’s first sovereign wealth fund.
Among the merits of a U.S. sovereign wealth fund would be the opportunity to leverage existing governmental assets, including federal land, infrastructure holdings and intellectual property, into revenue-generating investments. Transitioning from a debtor to a creditor nation is a lofty but likely goal.
Through it all, governance and transparency should be paramount, and the fund should be subject to congressional authorization, review and oversight.
While the concept of a U.S. sovereign wealth fund has been discussed before, previous administrations, including that of Joe Biden, have stopped short due to concerns about government interference in private markets. But several U.S. states have funds that are used to finance specific functions such as education or to provide general revenue.
Today, however, our lack of a sovereign wealth fund may be seen as a strategic vulnerability, especially when state-controlled investment funds around the world are exercising tremendous economic power. Structured properly, a U.S. sovereign wealth fund could provide a counterbalance to foreign sovereign wealth funds, allowing the U.S. to leverage its vast resources more effectively in the global economy.
Beyond financial gains, a strong U.S. fund could be an effective geopolitical tool to strengthen American economic diplomacy, funding infrastructure projects in strategic regions and reducing dependence on foreign capital markets.
With the right leadership, bipartisan support and a clear investment mandate, America’s sovereign wealth fund could serve as a game-changing financial instrument — one that advances the national interest and long-term prosperity.
As the media buzz surrounds the Trump economy, a U.S. sovereign wealth fund could advance America's interests in new and untold ways. Far from being punitive or controversial, it is a consequential idea whose time has come.
Adonis Hoffman writes on business, law and policy. He served in senior roles at the FCC and the U.S. House of Representatives and is a senior partner at American Law Group, PLLC
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