What you need to know
President Trump recently signed an Executive Order to create a United States Sovereign Wealth Fund (SWF). What is a SWF, and why do countries and American states form them?
- What is a sovereign wealth fund?
- Why do sovereign wealth funds exist?
- Which countries and states have them?
What is a Sovereign Wealth Fund?
A SWF is an investment fund created by nations or states. Most SWFs tap revenue from sales of state-controlled oil, gas, or other natural resources. The typical SWF serves as a way for a country or state to ensure future revenues through investment returns long after the resource that funded it is no longer being developed. China, Hong Kong, and Singapore have SWFs that are not based primarily on resource revenues.
What are the Top-10 SWFs in the world right now? What about American states?
The largest SWF (over $1.7 trillion in value) is Norway’s pension fund, which invests in petroleum revenues. It is followed by China ($1.3 trillion) and Hong Kong ($1.1 trillion). The table below shows the ten largest SWFs in the world.
Many industrialized countries, including Canada, the United Kingdom, Germany, and Russia, have smaller sovereign wealth funds. 23 U.S. states have SWFs funded by resource revenues, totaling over $332 billion in assets. The Alaska Permanent Fund, valued at over $76 billion, is by far the largest.
How well have SWFs performed over time?
Most SWFs do not disclose their financial returns. Because SWFs are designed to safeguard invested funds for the long-term, which means in strong markets they typically earn less, and in down market returns (and protection from losses) can be greater. For example, in 2024, Norway’s SWF returned $222 billion (13%) in profits in a year when the S&P 500, an index of the largest U.S. companies, returned over 24%. The Alaska Permanent Fund has returned an average of 8.1% annually between 2015 and 2025.
The Take-Away
Creating a U.S. sovereign wealth fund would not be unusual. Many industrialized countries have SWFs.
Compared to the larger SWFs worldwide, the key difference for a U.S. SWF would be its funding source. Most large SWFs are funded by natural resource sales. In the U.S., most of these assets are owned by individuals or corporations.
A U.S. SWF could be funded by assets confiscated from criminals (including bitcoins), or by sales of public lands, offshore oil and natural gas leases, communication spectrum, or other government assets. The potential amount of funds is likely less than most large national SWFs.
Moreover, in the short-term, diverting revenue from asset sales to a U.S. SWF would increase the federal budget deficit, as most of these funds are currently counted as revenue.
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Further reading
Pew Charitable Trusts (2016). From volatile severance taxes to sustained revenue. Issue Brief. Available at https://tinyurl.com/eh4yffne, accessed 2/7/2025.
Sources
Alaska Permanent Fund (2025) 2025 Mid-Year Review. https://tinyurl.com/4veu2t7k, accessed 2/17/25.
GIC (2018) Report on Management of the Government’s Portfolio. https://tinyurl.com/4y4hhw9d, accessed 2/9/25
Bernstein, S., J. Lerner, and A. Schoar (2013) The investment strategies of sovereign wealth funds. Journal of Economic Perspectives 27(2): 219-238. Available at https://tinyurl.com/4scp22hy.
Sovereign Wealth Fund Institute (2025). Top 100 ranked sovereign wealth funds. Available at https://tinyurl.com/3va7ykfh, accessed 2/5/2025.
Taylor, C. (2025). World’s largest sovereign wealth fund reports record $222 billion annual profit on tech rally. CNBC news. Available at https://tinyurl.com/2kx2vd5x, accessed 2/5/2025.
White House (2025). Fact sheet: President Donald J. Trump orders plan for a United States Sovereign Wealth Fund. Available at https://tinyurl.com/26z7wfkr, accessed on 2/7/2025.
Contributors
John Arnold (Intern) Is a sophomore at Binghamton University majoring in Political Science and Economics.
Robert Holahan (Content Lead) is Associate Professor of Political Science and Faculty-in-Residence of the Dickinson Research Team (DiRT) at Binghamton University (SUNY). He holds a PhD in Political Science from Indiana University where his advisor was Nobel Laureate Elinor Ostrom. His research focuses on natural resource policy, particularly in domestic oil and gas production, but also extends into international environmental policy. He was PI on a National Science Foundation grant that utilized a 3000-person mail-based survey, several internet-based surveys, and a series of laboratory economics experiments to better understand Americans’ perspectives on energy production issues like oil drilling and wind farm development.
William Bianco (Research Director) is Professor of Political Science at Indiana University and Founding Director of the Indiana Political Analytics Workshop. He received his PhD from the University of Rochester. His teaching focuses on first-year students and the Introduction to American Government class, emphasizing quantitative literacy. He is the co-author of American Politics Today, an introductory textbook published by W. W. Norton now in its 8th edition, and authored a second textbook, American Politics: Strategy and Choice. His research program is on American politics, including Trust: Representatives and Constituents and numerous articles. He was also the PI or Co-PI for seven National Science Foundation grants and a current grant from the Russell Sage Foundation on the sources of inequalities in federal COVID assistance programs. His op-eds have been published in the Washington Post, the Indianapolis Star, Newsday, and other venues.
