Treasury Secretary Scott Bessent has laid out the investment strategy for Trump Accounts, the government’s new tax-deferred savings program for American newborns. The money goes into low-cost index funds tracking broad US equity indices, with the explicit goal of getting the next generation invested in what Bessent calls “the American Dream.”

How Trump Accounts actually work

Every US child born between January 1, 2025, and December 31, 2028, qualifies for a $1,000 contribution from the Treasury, deposited into a dedicated investment account. That seed money gets invested immediately into low-cost US equity index funds or ETFs, such as those tracking the S&P 500.

Parents, grandparents, employers, and even philanthropists can add to the pot. Annual contributions from outside sources are capped at $5,000, with inflation adjustments kicking in after 2027.

The fee structure is notably aggressive. Management fees are capped at roughly 0.1% annually during the growth period, which runs until the accountholder turns 18.

Initial deposits are scheduled to begin on July 4, 2026. Trading in the accounts is expected to commence shortly after.

Approximately 6 million Trump Accounts have been opened so far, with around 1.4 million children qualifying for the government’s seed contribution.

What you can and cannot invest in

The investment menu is deliberately narrow. Trump Accounts allow holdings only in diversified US stock indices. Individual stocks are out. Bonds are out. Foreign-heavy indexes are out. And notably, cryptocurrencies and digital assets are completely excluded from the framework.

What this means for investors

If the program runs at full capacity through 2028, it would funnel at least $1.4 billion in government seed money alone into US equity index funds, before counting any family contributions. Add in the $5,000 annual contribution cap across millions of accounts, and you’re looking at a potentially substantial new source of passive inflows into broad market indices.

For the index fund industry, this is a structural tailwind. Firms like Vanguard, BlackRock, and Fidelity, which dominate the low-cost index fund space, stand to benefit from a captive pool of long-term capital with an 18-year lockup period.

The 0.1% fee cap also puts pressure on the broader asset management industry. If the government is telling families that investment fees should be near zero for their children, it becomes harder for advisors to justify charging 1% or more on adult portfolios.