Japan's Government Pension Investment Fund (GPIF) lowered its allocation to Japanese bonds during the three months ending in June, a move that preceded a call from the nation's finance minister to boost investments in domestic assets.

According to a quarterly report released in Tokyo on Friday, Japanese bonds now constitute 25.59% of GPIF's total assets. This represents a decline from the 26.91% recorded in March, though it remains within the six-year range of 23.64% to 27.64%. Japanese bonds were the only asset class that GPIF reduced its holdings in during this period.

This portfolio adjustment could place the world's largest pension fund in opposition to the policy direction of Prime Minister Sanae Takaichi's government. GPIF's investment decisions are often closely watched and can influence the strategies of other market participants.

Finance Minister Satsuki Katayama urged in July that funds like GPIF should increase their exposure to Japanese assets, drawing attention to the fund's asset allocation. Later that same month, Prime Minister Takaichi echoed similar sentiments, emphasizing in parliament the importance of encouraging both households and GPIF to increase their investments in Japanese financial assets.