By Krishna Eluri

(Reuters) - U.S. funds recommended trimming equity allocations in January as they wait for President Donald Trump to announce the infrastructure spending and tax cuts he promised during his election campaign.

Following Trump's shock victory in the race for the White House in November, U.S. stock markets have hit record highs on expectations he would cut taxes and regulation.

But major U.S. stock indexes posted their largest daily drop this year on Monday as a curb on immigration ordered by Trump reminded investors that some of the U.S. president's promised policies are not market-friendly.

The Dow Jones Industrial Average <.DJI> closed 0.6 percent lower on Monday, its largest one-day percentage drop since October.

Recommended equity allocations were cut to a three-month low of 52.2 percent from 52.7 percent in December, the survey of 13 fund managers conducted from Jan. 17 to 30 showed.

Funds left allocations to bonds and property largely unchanged, while a search for yield led to a slight increase in alternative investments such as hedge funds and commodities.

Recommended cash allocations were cut to 3.9 percent from 4.3 percent in December.

Funds increased bets in favor of high-yield securities at the expense of government and investment-grade bonds.

"The 'animal spirits' dynamic coming out of the Trump victory continues to be flagged as a big tailwind for equities," wrote Alan Gayle, director of asset allocation at RidgeWorth Investments.

"But while confidence can be a powerful tailwind, it ultimately must be validated by results. The early focus on ACA could delay potential positives from tax reform and infrastructure spending."

Since taking office, the president's focus has been on immigration and weakening the Affordable Care Act, the health insurance program also known as Obamacare.

Markets have priced in only a 4 percent chance the U.S. Federal Reserve raises interest rates this week, its first meeting since Trump took office on Jan. 20. All 106 economists in a Reuters poll were unanimous in not expecting any hike. (reuters://realtime/verb=Open/url=cpurl://apps.cp./Apps/cb-polls?RIC=USFOMC%3DECI)

"We believe that Federal Reserve monetary policy will err on the side of accommodation while potentially supportive fiscal and regulatory proposals are discussed and possibly implemented by the new Congress and Administration," Gayle said.

(Polling by Sarmista Sen and Purnita Deb; Editing by Catherine Evans)