How New Mexico doubled the size of its sovereign wealth fund in five years
The state has benefitted from oil and gas production but New Mexico's fund - which is now the second-largest in the US - has also pivoted to the sectors which it hopes will drive its economy once fossil fuels dry up, and its growth changing the way the fund is run
Overseeing more than $73bn in assets, the New Mexico State Investment Council fund has become one of the fastest-growing sovereign wealth funds within the US, second in size only to the $91.4bn Alaska Permanent Fund.
But perhaps more impressively, it has reached that point by doubling in size in the space of five years.
“In December 2020,” chief communications officer Charles Wollmann began, “our assets were valued at $31bn. Today, we’ve more than doubled that amount. By 2030, we anticipate they will be valued at more than $100bn.”
That trajectory, according to Wollmann, is driven primarily by a confluence of sustained inflows and strong market performance rather than a single investment strategy.
“New Mexico traditionally has been thought of by some as a ‘poor’ state,” Wollmann explained, “with challenges rooted in poverty, like crime and education, negatively impacting its various rankings nationwide.
“However the windfall wealth the state has experienced from oil and gas production, coupled with bold steps being taken by our state leaders and policymakers to leverage that capital and strategically tackle those challenges, is turning that narrative around."
According to Wollmann the SIC received more than $20bn in inflows over a three-year period, mainly attributed to the state’s 2018 fracking boom when production increased by 45 per cent year-on-year with large double-digit growth continuing thereafter.
2022 ushered in an inflection point with massive inflow growth stemming from price spikes; though production grew by more than 25 per cent, the gross value of that oil production swelled by more than 70 per cent.
To grow that windfall, the fund has been investing in private equity and venture capital in an approach which it developed in 2022.
This involves the use of “top-tier” funds which invest across the US which have “proven track records and large well-diversified portfolios”.
This is combined with a state-wide venture capital programme which aims to provide in-state economic development as well as financial returns, particularly in sectors aligned with New Mexico’s existing strengths: tech, aerospace and defence, and advanced energy.
“With over $1.8bn committed to dozens of top tier venture funds, our Strategic Venture Capital Programme is estimated to deliver $2.6bn in economic impact to New Mexico from just three projects announced in 2025,” Wollmann said.
Those projects, according to a recent report, are the California-based fusion start-up Pacific Fusion, geothermal company XGS Energy and defense technology startup Castelion.
Combined, the three ventures have yielded the SIC’s $1.8bn in commitments a full return, 600 full-time jobs and thousands of construction jobs in New Mexico, with additional capital to follow. Though, those are the yields of three fund investments. The state-wide venture capital program has tapped 30.
Wollmann said: “We at SIC already deliver billions in earnings to the state each year to fund essential public services, and that’s being put to work by state legislators and our governor, who are addressing issues related to education, crime, healthcare, energy, and the economy. This year, we returned $2.6bn to the state. Over the next decade, we estimate we’ll return $38bn total to our general fund and beneficiaries.”
The fund’s growth is changing the way it is run: the NMSIC does not currently make direct investments or invest through joint ventures but Wollmann said there was strong potential to explore partnerships with other investors.
He added that while the SIC continues to receive funds from oil and gas, the council is acutely aware revenues from fossil fuels will eventually decline as the world transitions to renewable energy resources.
“As that transition occurs,” Wollmann said, “New Mexico is shifting away from reliance on a highly volatile, non-sustainable resource to the much more stable revenue created by our permanent funds and endowments. Those fund distributions will increase over time to provide a much higher portion of general fund revenues.”
Wollmann expects that by 2050 the NMSIC’s distributions back to the state will cover a third of the state’s annual spending needs.
“We’re also doing our part to diversify the state’s economy through our venture capital program” he continued. “New Mexico has a long history of incredible feats of innovation ranging from the creation of the atomic bomb to the clean room. It is also home to world-class institutions including Los Alamos National Laboratory, Sandia National Laboratories, the US Air Force Research Laboratory, White Sands Missile Range, Spaceport America, and the state’s three research universities.
“We are focused on the state’s existing strengths in deep tech, aerospace/defense, and advanced energy. This has already brought landmark projects to the state, as previously mentioned, and our venture capital managers are always exploring ways to draw their portfolio companies to the state to take advantage of what we have to offer.”