Introduction
On February 4th, 2025, the White House issued an Executive Order (EO) calling for the creation of a United States Sovereign Wealth Fund (SWF). In it, U.S. President Donald J. Trump instructed the federal government, led by Departments of Commerce and Treasury and the White House Office of Management and Budget (OMB), to submit a plan for the SWF no later than May 4, 2025.
As a leading investor in frontier technologies that advance United States competitiveness, America’s Frontier Fund (AFF) believes that strategic investment is essential in areas where capital markets have failed to meet national needs. This is especially true for critical technologies – those such as advanced manufacturing, artificial intelligence, robotics, and hypersonics– that are time-consuming and capital-intensive to commercialize and scale. We know that China and other global competitors are investing trillions in these technologies, and using them in applications across healthcare, manufacturing, aviation, and defense. In many instances, such as semiconductors, batteries, or AI-powered surveillance systems, those applications could bring about economic vulnerabilities or national security threats for America.
Within the United States, forward-thinking agencies are already using the SWF model successfully. The New Mexico State Investment Council (NMSIC), an AFF partner, is a leading U.S. state-based sovereign wealth fund that generated $2 billion in income during the last fiscal year. Their investments have bolstered the state’s financial stability and attracted private funding for critical technology programs. Countless other governments – Texas, Alaska and North Dakota – as well as national governments like Norway and Singapore – are successfully using this model.
A national U.S. SWF could be an effective tool for driving technological disruption and serving America’s long-term financial interests. This memo offers a brief background and recommendations to support success, including prioritizing long-term returns; serving the national interest, especially economic competitiveness in frontier technologies; and delivering broad-based benefits to all Americans.
Overview of Sovereign Wealth Funds
A sovereign wealth fund (SWF) is a state-owned and/or managed investment vehicle designed to infuse public capital in strategic assets, industries, and markets. Historically, SWFs have been funded by trade surpluses, foreign exchange reserves, or commodity revenues and invest in various asset types and industries. When done properly, they generate societal benefits from financial growth to global competitiveness.
Over time, SWFs have shifted from traditionally passive investors managing extra reserves to active participants shaping investment trends, asset prices, market liquidity, and even geopolitics. Key deployment strategies for SWFs include fund-of-fund investments for frontier technologies, financing for infrastructure projects with an emphasis on critical supply chains and digital infrastructure, and equity investments and loans to support the competitiveness of U.S. firms.
In designing a national SWF, the United States Government should draw inspiration from successful SWFs in states like New Mexico, existing U.S. government models such as In-Q-Tel and the U.S. Development Finance Corporation, as well as countries around the world such as Singapore and Norway. Our review of these models has shown that the most effective SWFs combine the speed and agility of the private sector with the accountability and transparency of government ownership. This government-led, private-sector informed approach provides flexibility in operations and management alongside accountability for results in the national interest.
One example of how SWFs have supported critical technologies is Singapore’s Temasek Holdings, which has invested in artificial intelligence, semiconductor R&D, and quantum computing . Theirs has been a long-term, strategic approach that the U.S. could also adopt to remain ahead in frontier technology development.
Recommendations and Key Considerations for the U.S. SWF
A US SWF must deploy capital over long-term investment horizons, generating strong returns while securing multi-generational economic benefit for Americans. It is important that a portion of the SWF focus on accelerating America’s leadership in critical technologies, such as artificial intelligence, energy, biotechnology, and advanced manufacturing. Below are recommendations for the federal government as they begin their 90-day planning process.
Identification of sustainable funding source: Traditionally, the world’s most successful SWFs have specific funding sources. This is true for the state of Alaska (oil revenues), the China Investment Corporation (CIC is funded by trade surpluses), and Japan’s Government Pension Investment Fund (the world’s largest pension fund, invested in global assets). The U.S. has at its disposal a rich blend of assets and resources to serve as the basis for long-term, secure financial returns. The next step is to identify and secure them in the ways that best support the long-term growth of frontier technologies that benefit the national interest.
Prioritizing long-term returns: The fund’s success should be measured against a well-defined dual mandate: achieving robust financial returns and delivering tangible benefits to the American people. Only through strong financial returns over time can the Fund sustain itself and eliminate the burden of taxpayer-funded support. Therefore, reinvesting fund proceeds is another key pillar for its sustainability. By reinvesting earnings back into the fund, the SWF can compound its growth and become self-sustaining, reducing reliance on additional taxpayer funding. Ultimately, the success of the fund and its managers depends upon their ability to competitively return and grow the fund.
Serving the national interest: The SWF should prioritize transformative projects that require national leadership that the Fund uniquely enables. For example, prioritizing frontier technologies and infrastructure can reinforce long-term U.S. competitiveness. The fund’s unique position allows it to crowd-in additional capital from a variety of sources, allowing it to pursue national endeavors that could not be accomplished by the private sector alone.
Delivering broad-based economic benefits: The previous generation of technology companies have concentrated jobs and economic growth in a small number of coastal cities. 90% of innovation jobs over the last decade have been created in just five coastal cities. The SWF now has an unmatched opportunity to engage all corners of the nation in establishing U.S. technology leadership, combining the strengths of emerging technology hubs across the country with the breadth and depth of long-standing global leaders such as Silicon Valley.
Establishing a professional management team: The most important factor for the fund’s success will be the people managing it. For this reason, the fund should attract and retain the very best fund managers by putting in place performance-based incentives and a transparent governance structure. To ensure oversight and accountability to the American people, the Fund’s management should also be overseen by a board with strong backgrounds in finance, technology, and national security.
Governance and Accountability: To ensure the SWF is a foundation for building a stronger, more financially secure America, its structure depends on building an objective vehicle for generating returns that is free from external influence. This governance structure requires strong accountability measures that support returns while investing in America’s long-term interests. It must be shielded from the short-term agendas or trends in business, politics, and government.
Conclusion
AFF supports the vision for the U.S. SWF and stands ready to support investment in key industries and technologies that will generate strong returns and advance U.S. economic competitiveness. A U.S. SWF is a once-in-a-generation opportunity that, if implemented with the benefit of our unique resources and lessons learned from existing models, will attract talent, capital, and companies to the United States and become a much-needed instrument of U.S. geopolitical and economic influence.
