The burgeoning exchange-traded funds sector in Europe is expected to grow still further in the coming years, after the industry recently celebrated its 20th birthday.

ETFs, which are funds that track baskets of shares, bonds or commodities and are traded like stocks, were invented in 1993 in the U.S. and have been on an upward growth trajectory ever since due to their low costs and simplicity since they generally track established indexes.

“ETFs started in the U.S. and they’ve certainly been embraced there by everyone from institutions to retail,” said James Ryan, vice-president, institutional sales and trading at WallachBeth International in London, a U.S. brokerage firm which brought its best execution ETF trading model to Europe last year.

“We set up in Europe for a couple of reasons. Firstly, we expect growth of the ETF market in Europe and second, we don’t think anyone is doing exactly what we do. You have other brokers, but our desk is ETF-centric.”

A recent study by ETF provider State Street Global Advisors (SSgA), the asset management unit of State Street, which surveyed 260 European corporate pension plans and 41 U.K. active fund managers, found that 39% had no holdings of ETFs at all while a further 32% held less than 10% of their portfolios in ETFs.

“Despite strong growth in the ETF business globally over the past 20 years, the European ETF business remains relatively small compared with the wider mutual funds and U.S. ETF businesses,” said Scott Ebner, global head of ETF product development at SSgA.

However, almost half of the European corporate pension plans surveyed by SSgA said that they planned to increase their allocations to ETFs over the next five years while 42% of the U.K. active fund managers indicated that they would also increase their ETF usage in future.

“The whole of Europe is starting to see more products and is embracing ETFs slowly,” said Alan Roldan, institutional sales and trading at WallachBeth International.

“People like Vanguard [one of the largest ETF providers] have also set up over in Europe from the U.S.. That’s a good indication we are not the only ones who feel that way.”

The ETF sector is seen as more opaque in Europe, with as much as 70% of trades enacted over-the-counter. Trade reporting for ETFs in the U.S., in the form of a consolidated tape, is mandatory, although there are provisions for this to happen in Europe in the latest MiFID II proposals, but this is not likely to be enforced until 2015 at the earliest. And compared to the U.S., knowledge of ETF products generally is also seen as slightly lacking in Europe.

“Once education—getting acclimated to the product—and more transparency with the regulations happen, then that is going to be a massive catalyst,” said Roldan.

There also appears to have been a recent push by issuers of ETFs in Europe to target the retail sector, which has been relatively untapped so far.

“Once retail flow comes up that will also spur growth in the institutional market,” said Roldan.