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President Donald Trump has long expressed an interest in running his own sovereign wealth fund. During his 2024 presidential campaign, he proposed creating such a fund, asking at a rally in New York, “Why don’t we have a wealth fund? Other countries have wealth funds. We have nothing. We have nothing.” He has looked enviously at countries like Saudi Arabia, whose Public Investment Fund (PIF) manages over $925 billion in assets, and voiced his desire to set up a similar mechanism.
On February 3, 2025, Trump took a major step toward making his vision a reality by signing an executive order (EO) calling for the secretaries of the treasury and commerce to develop a plan to create a U.S. sovereign wealth fund (SWF) within ninety days. Spanning just three paragraphs, the EO was short on details but heavy on rhetoric, proclaiming that such a fund would “establish economic security for future generations” and promote U.S. “economic and strategic leadership internationally.” When signing the EO, Trump directly referenced the PIF, saying, “The Saudi Arabia fund is on the large side, but eventually we’ll catch it. We’re going to create a lot of wealth for the fund.”
SWFs have been around for more than a century, but they have grown dramatically in recent decades, from about $500 billion in assets in the 1990s to about $13.7 trillion overall today. SWFs have traditionally been set up by states rich in natural resources to manage their budgetary surplus, diversify their economies, and protect their wealth for future generations. The poster child is Norway’s $1.8 trillion SWF, established in 1990. It is the world’s largest SWF and now owns about 1.5 percent of all listed stocks worldwide. (Not all SWFs are funded with profits from natural resource exports; Singapore’s Temasek, South Korea’s Korea Investment Corporation, and the Türkiye Sovereign Fund were initiated from central bank reserves or given assets from state owned enterprises.)
Trump’s move to create a SWF isn’t wholly out of precedent for the United States—at least twenty-three states run their own funds, totaling $332 billion in assets (according to the White House). Former president Joe Biden’s team, in fact, discussed establishing a national-level fund during his last year in office. Yet considering Trump’s aggressive dismantling of government oversight bodies, alongside well-established accusations that he has engaged in financial misdealings and corruption, his plan to build an American SWF carries substantial risks.
What Is the Purpose of Trump’s SWF?
Trump’s EO offers few details about how the U.S. sovereign wealth fund would operate and what its purpose would be. As it reads, the fund could potentially engage in almost any kind of investment, making it next to impossible to evaluate whether creating the fund would serve the public interest. Is its aim to bolster U.S. technological innovation? Is it to enhance American security by incentivizing domestic investments in critical industries? Will sectors favorable to Trump’s interests, such as the crypto industry, be rewarded? (At one point, Trump even floated the idea of using the SWF to buy TikTok.) None of this is clear.
Additional concerns arise in relation to democracy and governance considerations. Would the fund be permitted to invest in undemocratic states like Saudi Arabia, thereby bolstering an authoritarian regime and further undermining any prospect of democracy or human rights for Saudi citizens? Could the SWF invest in the gold sector in the UAE, despite well-documented and repeated allegations that gold refineries in Dubai continue to launder conflict gold, including gold associated with genocide in Sudan (a charge the UAE denies)? While the plan’s supporters might note that Treasury and Commerce owe a joint plan to the president in May, and that such a plan could specify more concrete goals or a governance structure, the very lack of detail in the initial EO regarding how the SWF would be used is cause for concern.
In fact, one could reasonably argue that the EO’s vagueness about the SWF is by design. The fewer the specifics Trump has to provide about how he will use the fund, the more latitude he will have to manage it according to his preferences—with minimal constraints. Across the board, his team has sought to weaken institutional safeguards—affording themselves greater freedom to manage government operations according to their whims while shielded from scrutiny by regulatory bodies and career officials. At the Securities and Exchange Commission, which regulates financial markets, Trump’s team has scuttled yearslong fraud cases and lawsuits against the crypto industry, rolled back regulations, and initiated mass firings. Trump has ordered the Consumer Financial Protection Bureau, an agency tasked with protecting citizens from fraud and abuse by lenders and financial firms, to mostly cease its operations, including closing its Washington headquarters. In recent weeks, his attention has turned to the Internal Revenue Service, where he has installed a political operative dogged by fraud allegations to lead the agency, and where there are plans to reduce its 100,000-person workforce by as much as 50 percent. Meanwhile, Trump has fired scores of inspectors general with questionable legality, ordered the Treasury Department to cease enforcement of the Corporate Transparency Act (which requires registration of most shell companies), and ordered the Department of Justice to pause enforcing the Foreign Corrupt Practices Act (which makes it illegal for U.S. companies to pay bribes to foreign officials).
SWFs usually reflect the quality of governance of the states that sponsor them. When they are well governed and well managed, like Norway’s SWF, they can be a boon. But in countries with poor governance, regulatory capture, or weak rule of law, SWFs can be founts of corruption and incentivize malfeasance. Saudi Arabia’s fund is a good case in point. With nearly $1 trillion worth of assets under its management, the PIF stands as one of the largest sovereign wealth funds in the world. It is formally overseen by Governor Yasir Al-Rumayyan, but the real power behind the money lies with Crown Prince Mohammed bin Salman (known as MBS). Under MBS’s direction, the fund has taken many big swings: putting $40 billion into an AI fund, allocating $100 billion for electronics manufacturing, and ploughing billions more into infrastructure projects across the country. Some of these investments reflect sound financial decisions with the goal of generating robust returns. But other transactions provoke questions about financial impropriety and influence peddling.
In 2020, for instance, just six months after Trump’s son-in-law, Jared Kushner, left the White House, the PIF showered his private equity firm with a $2 billion investment. Despite objections from PIF advisors about the merits of the deal (citing Kushner’s management inexperience and “unsatisfactory” financial operations), MBS overruled them. After all, obtaining a financial return from the investment wasn’t the point. A much higher priority for MBS was maintaining close relations with Trump in case he won back the presidency. As a result, the PIF became a potent instrument of leverage for MBS to wield. “He can use these resources according to his preferences and thus purchase the loyalty of politically important factions within the elite,” writes analyst Stephan Roll for the German Institute for International and Security Affairs, as well as “‘buy’ international support for his political goals.”
Even under optimal conditions, SWFs present tempting opportunities for leaders to engage in corruption. To minimize the chance that SWFs will be used for illicit purposes, strong governance institutions are needed. These include establishing a well-defined institutional structure with clear objectives. Robust regulations should spell out how, where, and what quantities of assets a SWF can invest. A fund should have independent oversight and distinct chains of authority, as well as coherent and rational fiscal rules. Considering the Trump administration’s self-dealing and erosion of accountability, there is an acute risk that the U.S. SWF could become a source of graft to reward Trump’s friends, coerce political support for his priorities, and bring personal enrichment.
How Will Trump’s SWF be Funded?
Typically, SWFs are funded from surpluses generated by the sale of natural resources such as petroleum. While the United States has abundant natural resources and has become a net oil exporter, Washington also runs a massive budget deficit. The shortfall for fiscal year 2025 stands at $1.15 trillion; America’s total national debt exceeds $36.2 trillion. In short, the United States doesn’t have excess funds to put into a SWF.
Potential sources of funding suggested by Trump and his supporters are troubling from both a fiscal and a good governance perspective. In a fact sheet accompanying the EO, Trump’s team mentioned that the federal government “directly holds $5.7 trillion in assets” and even more through “natural resource reserves.” Presumably one idea would be for the federal government to liquidate its massive holdings—public land, federal building, other resources—in order to raise money for the fund. Indeed, on March 4, the General Services Administration briefly published a list of over 400 government properties to be sold, including the FBI and Department of Justice headquarters, as well as Veterans Administration buildings. After a public outcry, the list was pulled down; it is unclear whether this was a genuine effort by Trump’s team to raise capital for the fund or just a trial balloon.
A more specific proposal involves channeling tariff revenues into the SWF from a new outlined agency, the “External Revenue Service.” The January 20 “America First Trade Policy” EO tasked Treasury, Commerce, and Homeland Security with investigating how to create such a structure. Currently, tariff revenue is collected by U.S. Customs and Border Protection; depending on how this new agency is organized, it could allow Trump to pull a portion of U.S. tax collection away from Congressional oversight and into a de facto slush fund with minimal oversight or transparency. This isn’t a new idea; other countries have used similar approaches with troubling results. The example of the Türkiye Wealth Fund (TWF) warrants consideration.
When the TWF was established in 2016 by President Recep Tayyip Erdoğan, critics charged that the fund could become a “parallel budget” sitting outside of the Turkish parliament’s oversight or public audits. Those fears have been realized. The TWF was founded with $15.6 million from Türkiye’s budget. But since the country had no budget surplus to invest, the government started handing over lucrative revenue streams to the TWF, such as the proceeds from the national lottery and the government’s holdings in major institutional assets, including two of the country’s largest public lenders, Ziraat Bank and Halkbank; the state oil company; Turkish Airlines; Türk Telekom; and the public pension and insurance funds. The Turkish Parliament and public audit agencies lost oversight of these assets; instead, the TWF hand-picked private firms to conduct audit reports, some of which were designated “secret.” Meanwhile, a pliant board of cronies and relatives (Erdoğan was self-appointed board chair) took over management of the TWF. The TWF leveraged these transferred assets to take out even more loans, significantly increasing Türkiye’s debt burden. Türkiye’s experience shows that when a fund is created under spurious circumstances with scant oversight, it can generate serious liabilities and possibilities for misconduct.
Another idea floated by the White House is to earmark proceeds from Trump’s “gold card” scheme directly into the fund. (Under this plan, the United States would give wealthy foreigners the right to live and work in the country, as well as a pathway to citizenship, in exchange for a $5 million fee.) Here, Malta’s case is instructive. Malta used its golden passport program to capitalize its own SWF, and while the funds helped Malta weather budget shortfalls from the coronavirus pandemic, the country paid a heavy national security and governance price. Malta had perverse incentives to limit its vetting of those who bought these passports. Data leaks from a private firm administering the program revealed that 37 percent of applicants came from Russia, followed by 12 percent from China and 10 percent from Saudi Arabia. News reports revealed a rogues’ gallery of characters obtaining citizenship through Malta’s program, including an Egyptian who had been arrested on fraud charges in New York and a Russian “at the center” of a money-laundering operation. Because autocrats and criminals can send their cronies to acquire citizenship via gold card schemes, this offers a backdoor means to undermine democracies, facilitate sanctions-busting, and bankroll political candidates who are amenable to foreign leaders’ long-term interests. (When Trump was asked by a reporter whether Russian oligarchs could apply under America’s gold card proposal, Trump’s responded “yeah, possibly” and “I know some Russian oligarchs that are very nice people”—hardly an assurance that this method of funding would follow even basic due diligence standards.)
Depending on the details of how they are carried out and the level of legislative participation, these funding schemes can give rise to thorny constitutional questions. Under Article I of the Constitution, Congress has the “power of the purse,” giving it the authority to lay and collect taxes, to borrow funds, and to draw money from the Treasury pursuant to appropriations under law. Presumably an American SWF capitalized from tariffs or through the “gold card” visa program (or possibly from future Ukrainian mineral revenues) would allow Trump to circumvent the Congressional appropriations process. Because he could independently capture revenue and plug it into the fund, Trump would bear few obligations to the legislative branch, allowing him to ignore congressional subpoenas or requests for information related to the SWF. If Trump wanted to test the theory further, he could try to divert funds from eliminated programs as well as downsized agencies into the SWF. Trump could then expend this money with minimal legislative direction or accountability.
Sovereign Wealth Funds’ Checkered Investment Record
Sovereign wealth funds have a mixed investment record. The leading examples, such as Norway’s fund, maintain operational independence and make investments based on rigorous financial criteria. They have performed well and exhibit consistently high returns. Other funds, such as the PIF, illustrate the pitfalls of intermingling politics with financial investments. Under MBS’s direction, the PIF has initiated over $1 trillion worth of projects designed to pivot the country from its dependence on oil. One of his signature projects is the “planned utopian megacity” of Neom, which the PIF is creating from the ground up at a cost of at least $1.5 trillion. Within Neom, MBS envisions building a pair of “horizontal skyscrapers” called The Line that would stretch for 170 kilometers and house 1.5 million residents by 2030. But the entire project has run into problems. Costs have skyrocketed and billions have been wasted on unnecessary site preparations. The project’s timetable is delayed and construction workers have been let go. Now, officials expect that Neom will house fewer than 300,000 residents, with just 2.4 kilometers of the project completed by 2030.
Neom’s challenges aren’t unique; other Saudi megaprojects face similar delays and cost escalations. “Together, the price tag of all the plans runs into the trillions of dollars if fully built, far more than the country’s $1 trillion wealth fund—which includes investments that would be difficult to sell—has at its disposal,” reports the Wall Street Journal. This underlines the problems that arise when a political leader’s megalomania runs into the realities of operating a highly-resourced yet limited pool of money. With inadequate checks and balances, including a weak board incapable of rejecting MBS’s implausible schemes, the PIF will continue to run into problems.
In the United States, some commentators suggest that an American SWF could be a powerful vehicle to advance tech competitiveness against China. Steve Bowsher and Sarah Sewall write that Trump’s SWF “presents an unprecedented opportunity for American technological innovation” and would “catalyze additional private investment toward areas of critical innovation and the supply chains that secure them.” But the global track record of tech-focused sovereign funds is erratic (and this presumes competent management, hardly an assumption one can make with the Trump White House). Often, these funds miss their targets and are beset by waste and corruption.
Take, for example, China’s national semiconductor fund (commonly known as the “Big Fund”). Its goal is to use state resources to bolster China’s ability to manufacture advanced microchips. It was established in 2014 and has gone through three rounds of funding—the latest round in 2024 raised $48 billion. Yet the fund has consistently fallen short of its objectives. Initially, Chinese officials intended for the country to produce 40 percent of its chips domestically by 2020. It didn’t come close, barely hitting 17 percent. This year, China is projected to manufacture 40 percent of consumed chips in its factories, well short of its goal of 70 percent. In the meantime, several chip projects have floundered as a result of “frozen funding and mismanagement.” One state-backed chip consortium, Tsinghua Unigroup, has warned that it risks defaulting on nearly $2.5 billion in international bonds. While the Big Fund has undoubtedly achieved some successes, questions remain about whether using sovereign capital rather than accessing private markets is the best use of the country’s resources.
If Trump were genuinely interested in bolstering America’s competitiveness against China, a better way to achieve this would be to continue funding America’s existing science, research, and technology commitments, rather than creating a SWF from scratch. Over decades, federal support of America’s research institutions and scientific community has spawned industry-leading companies, breakthrough technological innovations, and a dominant military. As Saudi Arabia, China, and other countries have shown, the track record of SWFs in catalyzing innovation and stimulating new investments is notably uneven.
Large Risks and Dangerous Stakes
In a traditional administration led by a president with a demonstrated commitment to upholding the rule of law, establishing an American SWF would be a risky proposition. But with a president challenging legal constraints on his behavior on multiple fronts, proceeding with a SWF is especially concerning. The official leading the SWF effort, Michael Grimes, inspires scant confidence. He is a former banker from Morgan Stanley who was briefly in charge of evaluating the CHIPS program office (a signature initiative of Biden’s that oversees grants to companies making critical technologies). Reportedly, in interactions described as “demeaning,” Grimes demanded that CHIPS staff “justify their intellect” by providing test results from SAT tests or IQ assessments. There is little to suggest that Grimes will conduct a detailed or rigorous process in developing the SWF.
The public should be made fully aware of the consequences of Trump’s SWF proposal. Giving a president who aspires to be a king a potent financial weapon with ill-defined purposes and methods presents a grave risk to American democracy. At this early stage though, avenues still exist to shape the initiative. A key point of leverage is Congress. While Trump’s team has floated creative ideas for financing the SWF, he still needs to enact it in law. In this regard, Trump has two main options: create an entity from scratch (requiring new legislative authorization) or repurpose an existing vehicle, such as the U.S. International Development Finance Corporation, to house the SWF (the Development Finance Corporation is up for congressional reauthorization later this year, creating a window of opportunity for the SWF). Undoubtedly, Trump’s team will push Congress to pass open-ended legislation with scant oversight mechanisms and sweeping authority. This would give Trump maximum discretion to run the SWF as he’d like with minimal restrictions.
But Congress can do better. House and Senate committees should hold extensive public hearings for members to air out their concerns about how the fund will operate and compel government witnesses to defend how they will safeguard taxpayer money and prevent abuse. While the Republican-led Congress has so far failed to hold Trump to account on any issue, public advocacy might convince moderate members to scrutinize the SWF proposal more thoroughly. Any enacting legislation should include statutory safeguards designed to limit Trump’s ability to exploit the fund for personal or political gain. A good starting point would be invoking the Santiago Principles, a set of voluntary best practices released in 2008 that recommend setting up a “sound legal framework, independent oversight, public accountability, and fiscal stability” to govern SWFs. Congress should insist on incorporating these measures as a non-negotiable condition to authorizing Trump’s fund into law.
Above all, lawmakers and citizens deserve clear and honest answers to crucial questions: What will the SWF be used for? What is its purpose? How will it be funded? Who will watch over it to ensure American resources are used wisely? If Trump officials can’t provide satisfactory answers to these simple questions, then the U.S. SWF does not deserve the public’s support.