What Are Sovereign Wealth Funds and Does the U.S. Need One?
Money For the Rest of Us
J. David Stein
4.3 • 1.3K Ratings
🗓️ 12 February 2025
⏱️ 24 minutes
🔗️ Recording | iTunes | RSS
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Summary
The U.S. and the UK each announced they were establishing sovereign wealth funds. We explore the purposes and types of sovereign wealth funds, how they invest, and some concerns with the U.S. establishing one.
Topics covered include:
- What are the four types of sovereign wealth funds, and why the U.S. doesn't fit the typical use case
- How sovereign wealth funds navigate between politics and generating high returns
- Why a U.S. sovereign wealth fund, depending on its size, could crowd out other investment capital, leading to lower investment returns
- How the U.S. federal government already invests in its economy without a sovereign wealth fund
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Show Notes
A Plan For Establishing A United States Sovereign Wealth Fund—The White House
International Forum of Sovereign Wealth Funds
Guardians releases 2024 Annual Report—NZ Super Fund
2024 Invesco Global Sovereign Asset Management Study—Invesco
Top 100 Largest Sovereign Wealth Fund Rankings by Total Assets—Sovereign Wealth Fund Institute
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Transcript
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| 0:00.0 | As a long-term investor, you need long-term insights. Use Asset Camp to look past speculative |
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| 0:17.8 | assetcamp.com. That's A-S-S-S-C-A-M-P.com. Welcome to money for the rest of us. This is a |
| 0:26.1 | personal finance show on money, how it works, how to invest it, and how to live without worrying about |
| 0:32.4 | it. I'm your host, David Stein. Today is episode 5-11. It's titled, What are Sovereign Wealth Funds? And does the U.S. |
| 0:40.1 | need one? On February 3, 2025, President Donald Trump signed an executive order titled A Plan for |
| 0:48.0 | Establishing a United States sovereign wealth fund. The order pointed out that it's the policy of the United States |
| 0:56.5 | to maximize the stewardship of our national wealth for the sole benefit of American citizens. |
| 1:03.3 | To this end, the federal government wants to establish a sovereign wealth fund. To promote fiscal |
| 1:10.2 | sustainability, lessen the burden of taxes on |
| 1:13.2 | American families and small businesses, establish economic security for future generations, |
| 1:18.5 | and promote United States economic and strategic leadership internationally. |
| 1:24.8 | The next steps are for the Treasury Secretary and the Secretary of Commerce to |
| 1:30.0 | jointly submit a plan in 90 days detailing with their recommendations for how to fund the plan, |
| 1:38.3 | the investment strategies, the structure, and the governance model. |
| 1:43.5 | Sovereign wealth funds are investment funds that are owned or controlled by a government organization. |
| 1:51.7 | These sovereign wealth funds can be at the country level, such as the first sovereign wealth fund, |
| 1:56.8 | the Kuwait Investment Authority, or it can be at the state level like the Alaska Permanent Fund. |
| 2:03.1 | Around the world, there are over 100 sovereign wealth funds. They manage over $9 trillion in assets. |
| 2:10.1 | The top 10 make up 78% of assets. The largest is the Norway government pension fund global with $1.7 trillion in assets. |
| 2:21.0 | That's followed by two Chinese-controlled sovereign wealth funds, the China Investment Corporation |
... |
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