President Donald Trump has called for the creation of a sovereign wealth fund (SWF) “in order to promote the long-term financial health and international leadership of the United States.”
But what exactly is a sovereign wealth fund, and what might Trump’s plan mean for the United States?
What Is a Sovereign Wealth Fund?
A sovereign wealth fund is a government-owned investment fund with diverse assets that can include equities, real estate and infrastructure.
Funding sources often include revenues from commodity exports (such as oil or gas), foreign exchange reserves accumulated by the central bank or fiscal surpluses.
Many SWFs are established to preserve wealth for future generations, especially in countries with finite natural resources, while others support domestic economic development or invest in sectors important for national strategy.
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Global Examples
Nearly 90 countries operate sovereign wealth funds, collectively holding over $8 trillion in assets, according to the Sovereign Wealth Fund Institute.
The largest sovereign wealth fund in the world is Norway’s Government Pension Fund Global, which invests oil …