A sovereign wealth fund is supposed to run on money a government already has to spare: oil income, a trade surplus, or the proceeds of selling off a state asset. Australia’s Future Fund started that way, built from the sale of state-owned businesses. Two of the newest sovereign funds do not. Canada launched one this year funded by government borrowing, and Britain is funding its own the same way.
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What job does a fund do?
Analysts sort these funds into three kinds, and each choice commits a government to a different sort of institution. A savings fund converts income that will not last, usually oil, into financial wealth that outlives it. Norway’s fund, the one every other one gets measured against, invests its oil and gas revenue almost entirely outside the country for exactly that reason. A stabilisation fund instead flattens a government’s income when that income swings with a single commodity price. Chile runs one this way, holding back copper export revenue so a falling copper price does not tear a hole in the annual budget. A strategic fund does neither. It backs a government’s own economic goals and accepts a lower return in exchange, the way Saudi Arabia’s $925 billion Public Investment Fund exists to support the country’s Vision 2030 industrial plan.
Canada’s fund runs on borrowed money
Canada’s answer arrived this year, and it looks like a strategic fund with a debt-funded twist. Prime Minister Mark Carney announced the Canada Strong Fund in Ottawa on April 27, 2026, with an initial C$25 billion (about $18.4 billion, or £13.5 billion) for projects in energy, infrastructure, mining, agriculture and technology. Ordinary Canadians will also be able to put their own money into it, an option no other country’s fund offers. Carney framed the fund as Canada’s response to a changing relationship with the United States.
The fund breaks with how these things are usually built. Joseph Steinberg, an economics professor at the University of Toronto, told the BBC how a sovereign fund is normally built. It draws on a government’s own income, almost always oil, then spreads that money across a diversified portfolio abroad. Canada’s will do neither: it runs on borrowed money rather than revenue, and most of it is meant for projects at home. Opposition leader Pierre Poilievre called it a “sovereign debt fund,” pointing out that Norway, Singapore and Saudi Arabia built theirs from budget surpluses Canada does not have. The Montreal Economic Institute called it a costly bet for taxpayers with little prospect of a decent return.
Where the model came from
Norway is the fund every comparison starts with. Its Government Pension Fund Global has invested the country’s oil and gas surplus abroad since 1990, and by 2025 it held $2.1 trillion, more than any other fund in the world. The government did not back into that model. Oil was discovered off Norway in 1969 and production began in 1971, but the finance and industry ministries spent 1973 to 1975 working through the underlying economic questions before building anything. A chapter on Norway’s experience published by the IMF describes a fund shaped by years of asking how the country would keep growing once the oil ran out. That is a different question from deciding to save money because some happened to be spare.
Britain’s fund, and the risk that comes with a strategic one
Britain’s National Wealth Fund is smaller still, starting with only £7.3 billion. Its brief is to avoid losses rather than chase the best return, while it backs the country’s clean energy transition. Like Canada’s, it will run on government borrowing rather than a surplus. The UK’s fiscal rules treat a pound spent on an asset like a pound lost, which may be one reason the fund starts so small.
A strategic fund carries a risk a savings fund does not: a government spending public money on its own priorities is also the shape a corrupt deal can take. Malaysia’s 1MDB, also a strategic fund, triggered what US prosecutors once called the “largest kleptocracy case to date,” a 2016 designation that preceded the jailing of the country’s former prime minister. Angola’s FSDEA paid tens of millions of dollars to people close to the president’s son, the Panama Papers showed. For that reason, the Financial Times argues that ministers should stay out of a strategic fund’s day-to-day decisions and let it answer to a clear mandate instead of to whoever holds office.
Governance design is not the most exciting part of setting up a fund. The Financial Times argues it is the part most likely to decide whether Britain’s fund succeeds.
