Their preferred assets are generally located outside the US, including utilities and grid-equipment providers, the money managers said. Some also are turning to natural gas, which Europe has designated a green asset suited to enabling the transition. 

Trump’s tariff war has left investors struggling to navigate a fire hose of headlines from the White House, most of which have added to the uncertainty gripping markets. Green assets are among the most affected by the proposed tariffs, with duties and probes on imports from China and Southeast Asia set to magnify input costs for everything from batteries to power transformers and rare-earth minerals. 

Hedge fund managers interviewed said their strategy doesn’t entail shunning the US altogether, but most said they now see better opportunities in Europe and Asia.

Lisa Audet, founder and chief investment officer of Greenwich, Connecticut-based hedge fund Tall Trees Capital Management, said she’s finding “green shoots” of investment opportunities taking shape in Europe.

Per Lekander, chief executive of $2.7 billion London-based hedge fund Clean Energy Transition LLP, said he’s long Germany’s EON SE and RWE AG, as well as UK-based SSE Plc, because “they’re entirely domestic and quite cheap.”

EON, which is one of Europe’s biggest distribution grid operators and a key plank in the bloc’s efforts to electrify its power supply, is up almost 40% this year. Similar gains are playing out across European utilities, with the Euro Stoxx Utilities Index up 16% this year, compared with the 5% decline of the MSCI ACWI Index.

Armina Rosenberg, co-founder of Sydney-based hedge fund Minotaur Capital, said she and her team have “started buying some ‘decarb’ stocks, taking advantage of the drawdown in the market.” Companies targeted include First Solar Inc. and NextEra Energy Inc., which have supply-chain setups that mean they’re protected from and “may even benefit from tariffs,” she said.

Over the next 12 to 36 months, the outlook will improve, Rosenberg said. Ultimately, the need for “innovation will necessitate capital investment,” she said.  

Companies associated with the low-carbon transition have had to grapple with tariffs and supply shortages for several years now. But the intensity of the current trade war has left investors with few places to hide. 

“We are talking to the companies, taking into account the new information, but not necessarily acting on it because we don’t know how long this information sticks for,” said Isabella Hervey-Bathurst, who manages Schroders Plc’s $2.1 billion global climate change fund. “This uncertainty is leading to slower decision-making on projects.” 

Other green investors say that after initially responding to the tariff war by moving into cash, they’re now ready to move out.

Edward Lees, who manages BNP Paribas SA’s environmental solutions fund, said he’s used the latest market selloff to buy shares of water management companies in Japan and Indian power infrastructure firms.

And despite being the main target of Trump’s tariff war, China continues to attract green investors keen to add exposure to companies such as battery maker Contemporary Amperex Technology Co. and electric car brand BYD Co.

So far this year, BYD has gained close to 50%, compared with the decline of more than 40% in Tesla Inc.

Rosenberg said Minotaur has invested in BYD, based on an assessment that “Chinese EVs are taking share from Tesla.”

Much of China’s clean-tech industry targets its local market or developing regions such as Africa, according to the Centre for Research on Energy and Clean Air. The US accounts for only 4% of Chinese exports of electric vehicles as well as solar and wind equipment, but remains a dominant importer of batteries together with the European Union, the analysis found.

Meanwhile, the oil industry that Trump says he wants to support is facing considerable headwinds as demand growth falters while producer nations appear intent on keeping up supplies.

That opens the door to shorting US oil and gas companies, especially shale producers, “essentially because they’re high cost,” Lekander said. “And if you go to $50 oil, the business models simply don’t work.”