The Asian Development Bank says the Nauru Intergenerational Trust Fund will help ensure the country has a sustainable source of financing for the future.
ADB economist, Roland Rajah, writing in a new report, said Nauru had experienced an economic boom in recent years due to the Australian asylum seeker processing centre, along with strong revenues from fishing licences.
But he said the good times were unlikely to last forever and this had exposed the country to stark fiscal sustainability concerns.
Mr Rajah said the establishment of the trust fund was a critical first step to help address this situation.
He said Nauru had few opportunities to drive sustainable economic development but through a careful strategy of saving, investing, and spending wisely, it can use its current economic boom to secure a more sustainable economic future.
RNZ reports the ADB and Nauru's key bilateral donors helped establish the new sovereign wealth fund in May last year.
A previous Nauru trust fund failed in the 1990s.