Pursuing an unorthodox national wealth investment fund, the United States embarks on this unique financial endeavor.
The Trump administration introduced an unconventional approach to the sovereign wealth fund (SWF) strategy in the United States, deviating from the typical centralized, national savings-focused funds like Norway’s Norges Bank. Instead, the strategy was a decentralized, transaction-driven model aimed at industrial strategy and strategic public-private partnerships.
A prime example of this new approach can be seen in the Department of Defense’s $400 million equity investment in MP Materials, the only rare earth producer in the U.S. This investment made the Pentagon the largest shareholder (up to 15%) and included long-term offtake agreements to buy 100% of the magnets produced at a new facility. The goal was to reduce reliance on China for rare earth minerals crucial for clean energy and defense applications, thus combining industrial strategy and national security.
Another unconventional move was the executive order to expand access for 401(k) retirement plans to invest in alternative assets, such as private equity, cryptocurrency, private credit, and real estate. This order aims to democratize access to these asset classes beyond wealthy investors and public pensions, by instructing the Department of Labor and the SEC to ease regulatory burdens and revisit guidance that had traditionally discouraged alternative asset inclusion in retirement plans.
The US investment in MP Materials has attracted $1 billion in private financing from JPMorgan Chase and Goldman Sachs. Meanwhile, the US SWF may emerge as a major shareholder of TikTok, potentially holding 'golden shares' that grant the government veto power over key corporate decisions. This could mark the beginning of the US SWF’s co-investment partnership with global sovereign fund peers.
The addition of long-term US SWF investment could reduce perceived risk for private capital, making it attractive for co-investments. For instance, the US SWF is considering partnering with the $500 billion artificial intelligence data infrastructure initiative, Stargate, led by Open AI and Softbank. However, Stargate, an ambitious AI venture, is reportedly struggling to get off the ground and may be scaled back, despite its partnership with Oracle.
The US has also established a strategic bitcoin reserve, seeded with over $5 billion bitcoin seized in law enforcement actions. As of March 2025, the US now holds about 200,000 bitcoins, making it the world’s largest state holder of bitcoin.
Comparisons have been drawn between the US SWF strategy and the strategic investing behavior of other advanced economies, such as Germany’s use of its state-owned development bank KfW. The EU has expressed interest in investing at least $600 billion in various sectors in the US by 2029, creating another huge contribution to the Trump SWF construct. However, the EU contribution could be somewhat different from the Japan setup, being more decentralized.
Winston Ma, Executive Director of the Global Public Investment Forum and Adjunct Professor at NYU School of Law, has discussed these unconventional strategies, noting that they represent a broadening of sovereign-related financial strategies by facilitating more direct private market investments through defined contribution plans, which is unusual compared to traditional sovereign wealth fund investment approaches.
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