Japan held the largest amount of net foreign assets in the world in 2007 for the 17th consecutive year as investors purchased more overseas bonds and stocks to seek higher returns.

Net foreign assets, or the difference between assets and liabilities overseas, rose 16 percent from a year earlier to a record ¥250.2 trillion at the end of 2007, the Finance Ministry said Friday.

The expansion reflects the willingness of Japanese investors to buy securities that have higher yields than those at home, where the Bank of Japan's key interest rate is 0.5 percent, the lowest among major economies.

"The trend of Japanese buying more overseas securities than they sell will probably continue for the time being," said Mamoru Yamazaki, chief Japan economist at RBS Securities in Tokyo. "Domestic yields are low relative to those in other nations, causing more Japanese money to go overseas."

Expectations that Japan's borrowing costs will stay on hold this year is also causing Japanese investors to seek returns abroad, Yamazaki said.

Foreign assets climbed 9.4 percent to a record ¥610.5 trillion in 2007, the ministry said. The assets include investment in companies, securities, loans and savings Japanese made abroad as well as the nation's foreign reserves.

The liabilities, or the investment foreigners made in Japan, grew 5 percent to a record ¥360.3 trillion, the ministry said.

Japanese investors held ¥287.7 trillion in overseas bonds and stocks at the end of 2007, up ¥8.93 trillion from a year ago, according to the ministry. The yen rose 6.6 percent against the dollar in 2007.

Germany had an equivalent of ¥107.6 trillion in net foreign assets last year, the second-largest amount after Japan's, the ministry said.