When President Trump signed an executive order for the U.S. to create a government-run sovereign wealth fund, it created stock opportunities for investors.
Countries that are rich in resources typically have a wealth fund. For example, Norway, China, and Singapore have natural resources to back their fund. By contrast, the U.S. runs a deficit and depends on Treasury debt to raise funds. Still, this fund gives the U.S. another way to compete with countries that run such a fund.
Trump suggested using the fund to TikTok. This mention suggests that U.S. social networking stocks are the winning picks. Meta Platforms (META), Snapchat (SNAP), and Pinterest (PINS) may rise in value if the U.S. sovereign fund fails to acquire TikTok.
Investors should grow increasingly wary of holding long-term Treasury bonds. The fund would decrease the government’s reliance on selling debt to raise funds. That would hurt the 10-year Treasury bonds and longer. Consider avoiding exchange-traded funds like the 10+ Year Treasury (IEF) bond and the 20+ Year Treasury (TLT).
Cryptocurrencies and crypto platforms like Coinbase (COIN) would perform well. Bitcoin (BTC-USD) and Ethereum (ETH-USD) would rise in value. The fund would likely accumulate positions in both. Consumers would expect more stability in the crypto space. That would help Coinbase add more users to its platform.
