The election of Donald Trump resulted in a sharp reversal in asset flows. The moderately defensive stance observed prior to the election was replaced by a resolutely pro-cyclical approach, with US equities in particular making a comeback. Will the “Trump effect” endure in 2017? While the next few months may prove volatile in light of the recent market exuberance, in the longer term we should see a continuation of higher growth accompanied by stronger inflation. Asset allocation should be relatively aggressive, especially since profit growth should lead to some positive surprises in 2017.