What is a sovereign wealth fund?

A Sovereign Wealth Fund (SWF) is actually a state-owned investment fund for any country. It is comprised of assets such as stocks, bonds, real estate, or other financial instruments. Governments usually establish the funds to attain specific economic objectives.

The government generate the funds usually from foreign currency operations, budgetary surpluses, proceeds from privatisations, revenue generated from resource exports and governmental transfer payments.

The wealth fund is used for various economic and financial objectives, including stabilizing the economy, investing in long-term growth, providing for future generations and diversifying national income.

There are several types of Sovereign Wealth Funds globally, such as stabilization funds, savings funds, Reserve Investment Funds, Pension Reserve Funds and Strategic Development Funds.

Examples of Sovereign Wealth Funds: Norway’s Government Pension Fund Global (GPFG), China Investment Corporation (CIC), and Abu Dhabi Investment Authority (ADIA).

What is the US sovereign wealth fund?

US President Donald Trump has signed an executive action directing officials to create a sovereign wealth fund for the US. The decision came following through on an idea he floated during the presidential campaign.

This fund could possibly be used to buying TikTok, which has approximately 170 million American users.

The popular app was briefly taken offline just before a law took effect on January 19, as the US authorities concerned mandated Tiktok owner to either sell the app due to national security concerns or face a ban.

After taking office on January 20, President Trump delayed the enforcement of the law by 75 days by signing an executive order.