Investing on a National Scale: What If the U.S. Became a Wall Street Investor?

Ever felt the rush when your stock soars? Now, imagine that thrill magnified to a national level—what if the United States could invest like a seasoned Wall Street veteran?

Introduction: The Investor’s Dream Meets National Ambition

I love to invest. I get to explore exciting new companies, buy a share, and watch the stock tickers with anticipation. I relish the feeling of triumph when my stock climbs—and, admittedly, I also share the pain (and stubborn perseverance) when it falls. So, if I were President, I’d definitely exercise my ‘right’ to a country investment fund. And, calling it a “sovereign wealth” fund has a pretty appealing ring to it.

In the latest Executive Order from the White House that is exactly what Trump has said he will do - start a Sovereign Wealth Fund.

A First Glimpse: My Encounter with Sovereign Wealth Funds

My experience with sovereign wealth funds began back in 1997 when I joined the Bank of New York in Singapore. At the time, BNY had just acquired the JPMorgan book of Custody business, which included the US Custody business of the Government of Singapore Investment Corporation (GIC). My role was to ensure they could access our systems to “affirm trades” during the settlement process. Later, as the Continuous Linked Settlement (CLS) system for FX transactions emerged, I was tasked with training GIC on managing FX settlements. I even recall a lengthy discussion about 128-bit encryption—how that little padlock in Internet Explorer’s URL bar was supposed to symbolize robust security. They put me through my paces as a rookie client-trainer.

Lessons from Singapore: Due Diligence

Working with GIC, I witnessed firsthand how seriously they took due diligence. Winning, and keeping, GIC’s business was a badge of credibility—so much so that we weren’t allowed to mention it in our marketing. The rationale was simple: if something was good enough for GIC, it should be good enough for anyone. However, if every investment fund in Singapore appointed BNY there would be a concentration risk. So, in order to avoid that risk, the government-linked corporations (GLCs) were assigned quotas on which firms they could appoint. BNY had to navigate these quotas.

This rigid control, especially in a small country like Singapore, led me to the slightly tongue-in-cheek observation that the nation was “perfectly corrupt.” With the People’s Action Party (PAP) tightly controlling politics, coupled with the presence of GIC and Temasek Holdings (the latter being run by the Prime Minister’s wife and owning major companies like Singapore Airlines, Singapore Post, and the Development Bank of Singapore), there was little doubt about who was calling the shots. Yet, with nearly $1 trillion in assets under management today and a population of just 4 million, it all added up to an impressive, if tightly controlled, success.

Reflections on the U.S. Approach: Opportunities and Concerns

The US, with its sheer size, might not face the same concentration issues as Singapore. However, the idea of a sovereign wealth fund here raises important questions about conflicts of interest. For example, one commentator in the FT quipped that if Trump had this fund already:

“They could have shorted Canada and Mexico and exited on Monday.”

According to the FT, the fund is slated to be managed by Benjamin Black, son of Leon Black—the co-founder of Apollo Global Management. Meanwhile, if you tally up all the state-level funds (like the Alaska Permanent Fund and the Texas Permanent School Fund), the US currently ranks 10th in the world for sovereign wealth funds according to Wikipedia. Although definitions vary. So, for a more detailed analysis, Global SWF offers an excellent resource.

Typically, we usually think of sovereign wealth funds as designed to safeguard wealth—a means to diversify away from overdependence on a single resource, be it petroleum, tourism, or another concentrated revenue stream. The aim is to protect the economy from market volatility by spreading risk across various investments. However, according to the FT, the majority of SWFs are ‘strategic’ and may target non-financial objectives. They point to Saudi’s $925 billion Public Investment Fund supporting the Saudi Vision 2030 as a example. The emerging U.S. approach is not yet clear but appears to be driven by a strategic goal: channeling tariff revenues into strategic investments, or holding ‘banned’ companies, that could effectively be used, either intentionally or unintentionally, to steer the nation’s economic policy and direction.

“We’re going to be doing something, perhaps with TikTok, and perhaps not. If we make the right deal, we’ll do it. Otherwise, we won’t—but I have the right to do that. We might put that in the sovereign wealth fund.”

Conclusion: Balancing National Ambition and Market Freedom

From my perspective, the prospect of a U.S. sovereign wealth fund is undeniably intriguing. It hints at a forward-thinking strategy to harness tariff proceeds and other national revenues by investing in the dynamism of free markets. At the same time, there’s a valid concern that such concentrated control might exert an undue influence—a guiding hand that could compromise the very openness and competitive spirit that have driven American success.

What do you think? Would a U.S. sovereign wealth fund be a smart way to manage tariff proceeds in a free and open market, or would the guiding hand command too much influence and compromise the openness that the US prides itself on and to which we credit much of its success to date?