US President Donald Trump may not spring to mind as a tailwind for renewable stocks, given his anti-ESG slant. The US president’s emphasis on fossil fuels and hostility to ESG policies has been reflected in the slashing of renewable tax incentives and his encouragement to “drill baby, drill”, perceived as a challenge to these stocks.
But for Jean-Hugues de Lamaze, manager of the Ecofin Global Utilities and Infrastructure Trust, the US president’s overt hostility led to some attractive opportunities.
“We’ve lived through two elections of Donald Trump,” Hugues de Lamaze told Portfolio Adviser, “He was elected on a programme of boosting GDP and was extremely sceptical about climate change and clean energy, which has been perceived as a headwind to our world of stocks.”
In the immediate aftermath of Trump’s first election in October 2016, the Ecofin manager explained the average stock in the “renewable energy bucket” slid by anywhere from 10-15%. To a slightly lesser extent, something similar happened in October 2024, he added.
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The manager attributed part of this to rising bond yields and Trump’s hostile approach. “When you have a fast steepening of yield curves, which we’ve seen a little bit of over the summer, in general you see investors start to sell what they see as ‘ long-term business models.” Energy and infrastructure stocks tend to be harshly affected by this, he said.
However, this downturn made for a particularly attractive entry point, as energy and infrastructure stocks sold off in unison, regardless of fundamentals, according to de Lamaze.
“The market still takes infrastructure as an overall basket, so we’re still seeing times when the whole space moves as a uniform asset class, with no discrimination between names and businesses.”
The mistake investors made after the election of Trump, he said, was assuming that energy stocks represented a “uniform investable universe”, when in fact they are highly distinct.
“In the months following the elections, so in 2017 and 2025, we had some of our best performing years,” he said. In 2017, the trust surged 27.7%, while in 2025 it was up 38.3% in sterling terms, according to data from FE fundinfo.
This reflects the fund’s best and third-best annual performance in the past decade, according to FE fundinfo data
“This is not a coincidence,” de Lamaze told Portfolio Adviser. “Both market events have allowed us to buy high-quality names with sound outlooks at cheap valuations.
“When you look at the fundamentals, you can find companies that are largely immunised against spikes in interest rates like this and sometimes even benefit from it, because a lot of them have long-term debt based on fixed rates.”
To illustrate this diversity of opportunity within the energy universe, de Lamaze pointed to the wind energy sector. While it may be easy to assume all wind companies are subject to similar drivers, they can be far more different than they appear, he argued. In particular, he highlighted Danish offshore wind developer Orsted and American onshore wind developer NextEra Energy.
Orsted is a stock the team has “never owned”, according to the Ecofin manager, due to having plenty of “red flags” around the business. “It was a company so obsessed with growth that it signed contracts in unfavourable conditions, and couldn’t pass the costs of rising inflation through,” the Ecofin manager explained.
As a result, when inflation and bond yields spiked, the share price slid more than 70% over the past five years, according to Google Finance.
Meanwhile, NextEra has experienced a much different trajectory, and the team are far more positive about its long-term potential. At the time of writing, it’s currently one of the Ecofin team’s top positions, despite the hostile US administration.
“NextEra has proved much more able to pass through the effects of inflation than the market anticipated,” he explained. This is because it signed much better-quality contracts and has less of a fixation on growth.
For comparison, while Orsted has fallen more than 70% over the past five years, NextEra is down just 3% over the same period and has grown over the past three years.
“On the surface, two wind developers, but there is massive dispersion of returns due to the structure of their contracts,” de Lamaze said. “That shows the extremes you can have within this space.
“The real beauty of our space is that there is not much correlation between the subsections,” he explained.
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