President Trump signed an executive order that puts in motion plans for a U.S. sovereign wealth fund. Here's what a sovereign wealth fund is and how it works.

Several U.S. states already have sovereign wealth funds — government-controlled investment funds that enable excess capital to be invested — including those backed by energy and mineral resources, such as the $80.5 billion Alaska Permanent Fund Corp., Juneau, the largest in the U.S.

US President Donald Trump recently signed an executive order ordering the U.S. Treasury and Commerce Departments to create a sovereign wealth fund for the United States. But what is this fund and how this system works?

Analysts caution the recently authorised fund could compete with Chinese state investment or buy overseas holdings like TikTok.