Key Takeaways
- • The Pentagon's $400m equity investment in MP Materials, the only US rare earth producer, under the Defense Production Act, could give the Department of Defense a potential 15% stake and make it the largest shareholder, with offtake agreements for 100% of magnets from the new facility.
- • The DoD commitment attracted $1bn in private financing from JPMorgan Chase and Goldman Sachs for MP's '10X' magnet plant in Texas, per the article.
- • Winston Ma, writing for OMFIF, argues the Trump administration is building an unconventional, decentralised sovereign wealth fund model driven by industrial strategy rather than national savings.
- • The article cites a $5bn-plus bitcoin reserve seeded by seized assets, a potential TikTok stake via golden shares, and pledged investments of $550bn from Japan and at least $600bn from EU companies as components of the emerging framework.
- • Trump announced a US sovereign wealth fund in February 2025; the author describes it as a federated, transaction-driven model rather than a single centralised fund.
Summary
Since President Donald Trump announced a US sovereign wealth fund in February 2025, the proposal has generated both expectations and controversy, with calls for a formal, legislatively grounded vehicle modelled on examples such as Norway's Norges Bank Investment Management. Writing for OMFIF, Winston Ma, Executive Director of the Global Public Investment Forum and Adjunct Professor at NYU School of Law, argues that the administration is instead pursuing an alternative path: a bottom-up, ad hoc model that uses sovereign capital as an instrument for strategic investment rather than national savings.
The most prominent example cited is the Department of Defense's $400m equity investment in MP Materials, the only rare earth producer in the US. Under the Defense Production Act, the Pentagon is becoming MP's largest shareholder, with a potential 15% stake and long-term offtake agreements covering 100% of the magnets produced at the company's new facility. According to the article, the commitment helped attract $1bn in private financing from JPMorgan Chase and Goldman Sachs for MP's '10X' magnet plant in Texas, as the government investment de-risked the project through procurement and revenue certainty.
The article also points to a strategic bitcoin reserve announced in March, seeded with over $5bn in bitcoin seized in law enforcement actions and to be supplemented by budget-neutral acquisition strategies. Estimates place federal holdings at about 200,000 bitcoin as of March 2025. Separately, a series of executive orders extended TikTok's reprieve from a 'sell-or-ban' demand to mid-September, and the author suggests the US SWF may become a major TikTok shareholder through golden shares granting government veto power, similar to the arrangement in Nippon Steel's acquisition of US Steel.
Oma compares this approach with other advanced economies, citing Germany's use of KfW to block China's State Grid from acquiring a stake in 50Hertz in 2018. He notes that global SWFs commonly pursue both strategic industrial promotion and financial returns, a 'double bottom-line' concept coined by the Ireland Strategic Investment Fund. What distinguishes the US model, he argues, is its decentralised structure, with multiple agencies leading transactions rather than a single centralised fund.
Looking ahead, the author suggests the US SWF could partner with Stargate, the $500bn AI data infrastructure initiative led by OpenAI and SoftBank, which is reportedly struggling to get off the ground and may be scaled back despite a $30bn-a-year, 4.5GW data centre partnership with Oracle. He also cites a Japanese pledge to invest $550bn in US industries under the US-Japan Strategic Trade and Investment Agreement, and, per the European Commission, EU companies' stated interest in investing at least $600bn (ca. €550bn) in the US by 2029 under the July US-EU trade deal. The author acknowledges that details remain unclear and questions how the US, which has run persistent budget deficits, would fund a sovereign wealth fund.
The most prominent example cited is the Department of Defense's $400m equity investment in MP Materials, the only rare earth producer in the US. Under the Defense Production Act, the Pentagon is becoming MP's largest shareholder, with a potential 15% stake and long-term offtake agreements covering 100% of the magnets produced at the company's new facility. According to the article, the commitment helped attract $1bn in private financing from JPMorgan Chase and Goldman Sachs for MP's '10X' magnet plant in Texas, as the government investment de-risked the project through procurement and revenue certainty.
The article also points to a strategic bitcoin reserve announced in March, seeded with over $5bn in bitcoin seized in law enforcement actions and to be supplemented by budget-neutral acquisition strategies. Estimates place federal holdings at about 200,000 bitcoin as of March 2025. Separately, a series of executive orders extended TikTok's reprieve from a 'sell-or-ban' demand to mid-September, and the author suggests the US SWF may become a major TikTok shareholder through golden shares granting government veto power, similar to the arrangement in Nippon Steel's acquisition of US Steel.
Oma compares this approach with other advanced economies, citing Germany's use of KfW to block China's State Grid from acquiring a stake in 50Hertz in 2018. He notes that global SWFs commonly pursue both strategic industrial promotion and financial returns, a 'double bottom-line' concept coined by the Ireland Strategic Investment Fund. What distinguishes the US model, he argues, is its decentralised structure, with multiple agencies leading transactions rather than a single centralised fund.
Looking ahead, the author suggests the US SWF could partner with Stargate, the $500bn AI data infrastructure initiative led by OpenAI and SoftBank, which is reportedly struggling to get off the ground and may be scaled back despite a $30bn-a-year, 4.5GW data centre partnership with Oracle. He also cites a Japanese pledge to invest $550bn in US industries under the US-Japan Strategic Trade and Investment Agreement, and, per the European Commission, EU companies' stated interest in investing at least $600bn (ca. €550bn) in the US by 2029 under the July US-EU trade deal. The author acknowledges that details remain unclear and questions how the US, which has run persistent budget deficits, would fund a sovereign wealth fund.
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