The New Mexico State Investment Council (NMSIC) manages the largest state permanent-fund system in the United States — roughly US$70 billion at the end of 2025, built mainly from oil and gas royalties. Through the Land Grant and Severance Tax permanent funds, it turns finite mineral revenue into a perpetual endowment whose payouts help fund public schools and state services.
The United States rarely thinks of itself as home to sovereign wealth funds, but it is — they just sit at the state level. The largest of them is run by the New Mexico State Investment Council, which quietly manages one of the biggest pools of permanent public capital in the country and turns a depleting resource, oil, into a perpetual endowment for public education.
What is the New Mexico State Investment Council?
NMSIC is the state agency responsible for investing New Mexico's permanent funds — long-horizon endowments seeded by the state's mineral wealth. It operates much like a sovereign wealth fund: it does not exist to run a business or pay pensions to specific workers, but to preserve and grow capital across generations and distribute a sustainable payout to public beneficiaries each year.
The comparison to national sovereign funds is apt. Like Norway's fund or the Gulf funds, NMSIC converts finite hydrocarbon revenue into a diversified global portfolio, spends only a rule-based share of it, and aims to keep the principal intact forever.
How much does NMSIC manage?
NMSIC managed about US$64.0 billion as of 30 June 2025, growing to roughly US$71 billion by the end of 2025. That makes it the largest state permanent-fund investor in the United States — bigger than Alaska's better-known Permanent Fund — and one of the largest sub-sovereign investors anywhere.
The total is spread across several funds, but two dominate: the Land Grant Permanent Fund and the Severance Tax Permanent Fund. Smaller pools, including a Tobacco Settlement fund and a Water Trust fund, round out the system.
The Land Grant Permanent Fund
The Land Grant Permanent Fund (LGPF) is the crown jewel, holding about US$35.6 billion at 30 June 2025. It dates to New Mexico's admission as a state in 1912, when the federal government granted trust lands whose proceeds were dedicated to public institutions.
The fund receives royalties from oil, gas and mineral production on those state trust lands — and because New Mexico has become a major oil producer, roughly 99% of the fund's contributions now come from oil and gas. Its distributions overwhelmingly support public schools and universities, which is why the fund is central to debates about how to finance early-childhood and K-12 education in the state.
The Severance Tax Permanent Fund
The Severance Tax Permanent Fund (STPF) held about US$11.1 billion at 30 June 2025. Established in 1973, it is funded by severance taxes — levies on the extraction of natural resources — that are not required to service capital-outlay bonds. Its distributions flow to the state's general operating budget, reducing the tax burden on residents.
Together, the LGPF and STPF illustrate the two classic uses of a resource endowment: one dedicated to a specific mission (education), the other to broad fiscal support.
Where does the money come from?
Overwhelmingly from oil and gas. New Mexico sits atop part of the Permian Basin and has become one of the highest-producing oil states in the country. Royalties on production from state trust lands, plus severance taxes, are the dominant inflows into the permanent funds. This dependence is a strength in a drilling boom and a risk in a downturn or a long-run energy transition — the same double-edged position faced by every commodity-funded sovereign investor.
How are the funds invested and paid out?
The Council invests across a diversified, institution-grade portfolio: global public equities, fixed income, private equity, real estate, real assets and private credit. Over the past decade it has built a substantial private-markets program, accepting illiquidity in exchange for higher expected long-term returns.
Each permanent fund distributes an annual payout calculated as a percentage of a multi-year average market value — a smoothing mechanism that lets beneficiaries receive stable funding without forcing the fund to sell into weak markets. The payout rule is the discipline that keeps a "permanent" fund permanent.
How is NMSIC governed?
The State Investment Council is an eleven-member body chaired by the Governor, with the State Investment Officer acting as chief executive and chief investment officer. The structure is designed to insulate day-to-day investment decisions from short-term politics while keeping ultimate accountability public. NMSIC reports performance openly and has drawn national attention for the scale of the returns its private-markets and diversification program has generated.
How does NMSIC compare to other US state funds?
New Mexico's system stands out even among America's resource-funded states. It is larger than the Alaska Permanent Fund, the Texas Permanent School Fund and North Dakota's Legacy Fund, and unlike Alaska it does not pay a universal cash dividend to residents — its payouts are institutional, flowing to schools and the budget rather than to individuals. That design keeps more capital compounding inside the fund and helps explain how it has grown into the country's largest state endowment despite New Mexico's relatively small population and economy.
The peer that matters most for the future is the same everywhere: how fast, and how far, oil demand declines. Because NMSIC's inflows are so concentrated in Permian production, its long-run trajectory is a leveraged bet on how the energy transition unfolds — a reason the Council's diversification into global private markets is strategic rather than merely opportunistic.
The bottom line
The New Mexico State Investment Council is, in all but name, America's largest state sovereign wealth fund. At roughly US$70 billion, funded by Permian oil and dedicated substantially to public education, it is a working demonstration that the sovereign-fund model — save the windfall, diversify globally, spend only the sustainable share — is as relevant to a US state as to a petro-nation. Its central challenge is managing deep dependence on a single, finite commodity while the world debates how long that commodity's boom will last.