The global exchange traded fund industry is enjoying a boom in growth, especially in Europe where listed exchange traded products hit a record last year, reflecting the rising popularity of index-based strategies outside the dominant U.S. market.

According to ETFGI, Europe-listed ETF and product assets hit $802 billion last year, reports Jennifer Thompson for the Financial Times.

While Europe’s ETF industry only makes up a slice of the $4.8 trillion global market, Europe’s ETF market is one of the fastest-growing regions, expanding 40% year-over-year, the strongest rate since 2009. In contrast the global growth rate for the investment was 36%.

“It is part of a broader shift towards indexing,” Stephen Cohen, head of BlackRock’s iShares ETF business in Europe, the Middle East and Africa, said. “We are just starting the journey the US has seen over the last five years or so.”

The Europe ETF market holds 2,260 products, compared to 2,116 in the U.S. The region with the sharpest growth rate was Japan, where assets surged 60% to $276 billion. Meanwhile, U.S. assets grew 34% to a whooping $3.4 trillion.

Investment money continues to find its way into index-based vehicles like ETFs as asset managers seek out cheaper alternatives to pricey and often underperforming actively managed funds. Additionally, new ETFs are being supported by the perception that the investment vehicle is simple and provides improved diversification.

Further supporting the Europe-listed ETF growth story, the recently implemented rules in Europe could be a catalyst for increased ETF demand. Mifid II requires detailed reporting of ETF trades and will provided a clearer picture of pricign and liquidity. The lack of data previously deterred many from investing in the investment tool.

For more information on the ETF industry, visit our ETF performance reports category.