The Proposal for a U.S. Sovereign Wealth Fund
The U.S. Treasury and Commerce Departments have finalized a proposal for establishing a sovereign wealth fund, which is currently being assessed by the White House. This initiative follows an executive order issued by former President Donald Trump, which set a 90-day timeframe for the agencies to devise a detailed plan.
Background on the Sovereign Wealth Fund
On February 3, President Trump instructed the relevant agencies to develop a comprehensive strategy for a sovereign wealth fund. As that timeframe ended recently, a spokesperson from the White House confirmed that the proposal had been submitted for review.
Despite the completion of this plan, it appears that a final decision is not imminent, as some components of the proposal have been met with resistance from White House officials. According to a report from CBS, unspecified aspects of the plan, devised under Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick, were deemed unsatisfactory by the administration.
Statements from the Administration
White House spokesman Kush Desai stated, “In accordance with President Trump’s executive order, the Treasury and Commerce Departments have formulated plans for a Sovereign Wealth Fund, but no final decisions have yet been made.” He emphasized the administration’s commitment to leveraging available tools to enhance national and economic security.
The White House has not divulged specific feedback regarding the initial proposal.
Understanding Sovereign Wealth Funds
Sovereign wealth funds usually serve as significant investors in commercial real estate and have gained traction in the aftermath of the 2008 financial crisis. They are most frequently established in nations exhibiting large current-account surpluses derived from natural resource exports.
The anticipated plan includes recommendations on funding mechanisms, investment strategies, structure, and governance. However, it remains uncertain how the United States would fund such a sovereign wealth fund or allocate its investments. President Trump has suggested potential uses, including acquiring the TikTok app from its Chinese parent company.
Global Examples
Noteworthy sovereign wealth funds globally include Saudi Arabia’s Public Investment Fund and the Government Pension Fund of Norway. The latter, managed by Norges Bank, is recognized as the largest sovereign wealth fund worldwide, boasting assets of approximately $1.8 trillion, of which 5% is allocated to real estate.
The Trump administration has highlighted the possibility of monetizing government assets valued at $5.7 trillion, including $1.3 trillion tied to property and equipment. Trump has expressed that an American sovereign wealth fund could rival the Saudi Arabian fund, which manages assets worth $925 billion. According to Secretary Bessent, the U.S. government possesses “fantastic assets” that could lend themselves to lucrative opportunities.
Report contributed by Maddy McCarty.