United States President Donald Trump signed an executive order directing the creation of a sovereign wealth fund within the next year, suggesting it could potentially be used to acquire the short-video app TikTok.
The move would align the U.S. with other nations, particularly in the Middle East and Asia, that have established similar funds to manage state investments.
The executive order instructed the Treasury and Commerce Departments to develop a plan within 90 days, outlining funding mechanisms, investment strategies, governance models, and the overall structure of the fund. However, with the U.S. operating at a budget deficit, the establishment of such a fund would likely require congressional approval.
“We’re going to create a lot of wealth for the fund,” Trump told reporters. “And I think it’s about time that this country had a sovereign wealth fund.”
Trump had previously floated the idea of a government investment vehicle as a presidential candidate, proposing it could finance national projects such as infrastructure, manufacturing, and medical research. Administration officials did not elaborate on the financing structure, though Trump has mentioned tariffs and other revenue sources as potential contributors.
Treasury Secretary Scott Bessent stated that the fund would be operational within 12 months. “We’re going to monetize the asset side of the U.S. balance sheet for the American people,” Bessent said. He suggested the fund could incorporate a mix of liquid assets and national resources.
One approach under consideration is repurposing the U.S. International Development Finance Corp (DFC) to function similarly to a sovereign wealth fund. The DFC currently partners with private entities to finance projects in developing nations. Reports indicate the Trump administration had been reviewing this strategy for months. Last week, Trump nominated Benjamin Black, an investment firm executive, to lead the DFC.
Prior to Trump’s election, the Biden administration had also explored the possibility of a sovereign wealth fund, according to reports from The New York Times and Financial Times. However, experts suggest congressional approval would be necessary for funding, given the lack of a budget surplus.
Clemence Landers, a former Treasury official and current analyst at the Center for Global Development, noted that while discussions about repurposing the DFC had taken place, establishing such a fund would require legislative backing. “Obviously, you can’t establish an institution by executive order, and more importantly, you can’t fund it by executive order,” Landers said.
Market analysts reacted with skepticism, pointing out that sovereign wealth funds typically rely on surplus revenue. “Creating a sovereign wealth fund suggests that a country has savings to allocate. The economic fundamentals here don’t align,” said Colin Graham, head of multi-asset strategies at Robeco in London.
Globally, over 90 sovereign wealth funds manage assets exceeding $8 trillion, according to the International Forum of Sovereign Wealth Funds. Several U.S. states, including Alaska, Texas, and New Mexico, operate state-level wealth funds, often supported by revenues from natural resources like oil and land leases.
In a surprising twist, Trump hinted that the sovereign wealth fund could be used to acquire TikTok, the popular app owned by China’s ByteDance, which faces a U.S. divestment deadline under national security concerns. Trump previously delayed enforcement of the order requiring ByteDance to sell TikTok and suggested a decision would be made by February.
