U.S. President Donald Trump has signed a decree to establish a state investment fund, fulfilling a campaign promise. During a press conference in the Oval Office, Trump emphasized the fund's potential, stating, "We have enormous potential." U.S. Treasury Secretary Scott Bessent and designated U.S. Commerce Secretary Howard Lutnick will lead the initiative.
The fund is set to be established within the next 12 months and is deemed "of great strategic importance" by Bessent. Trump indicated that the fund could facilitate the sale of TikTok, which remains operational in the U.S. due to a signed extension for a forced sale or shutdown.
Lutnick noted that the U.S. government could leverage its size and reach in business dealings, citing pharmaceutical companies as an example. He suggested that if the government intends to purchase two billion COVID vaccines, it may be prudent to hold options and stakes in those companies.
The decree instructs the U.S. Treasury and Commerce Departments to present a plan within 90 days, outlining recommendations for financing, investment strategies, fund structure, and governance. It will also assess the legal implications of establishing and managing the fund, including whether new legislation is required.
Trump first proposed the idea of a sovereign fund during a speech at the Economic Club of New York in September, suggesting that tariff revenues could be funneled into the fund to invest in production facilities, defense, and medical research.
Sovereign funds typically exist in countries with large foreign exchange reserves, such as China, or those generating revenue from oil or other commodities, like Norway and Saudi Arabia. These funds invest in a variety of assets, including stocks, bonds, infrastructure, and technology. Notable examples include Norway's Norges Bank Investment Management at $1.8 trillion, China's Investment Corp. at $1.3 trillion, and Abu Dhabi's Investment Authority at $1.1 trillion.