Executives from Goldman Sachs and Innovator Capital Management shake hands after finalizing an acquisition.
Goldman Sachs has finalized its acquisition of Innovator Capital Management, a move that significantly expands its footprint in the active ETF market. The acquisition brings Goldman Sachs Asset Management’s total ETF assets under supervision to approximately $90 billion.
Active ETFs, known for their lower costs and flexible strategies, are increasingly attracting investors, especially as returns from passive index products have begun to lag. The deal, initially announced in December, involved Goldman Sachs acquiring Innovator Capital, which managed 171 ETFs with about $31 billion in assets, for approximately $2 billion.
According to Goldman Sachs CEO David Solomon, this acquisition marks a “transformative step” in the firm’s commitment to delivering investment solutions designed to achieve specific outcomes for investors throughout market cycles.
Following the acquisition, Innovator’s co-founders Bruce Bond and John Southard will join Goldman Sachs as advisory directors. Additionally, Chief Investment Officer Graham Day and Head of Distribution Trevor Terrell will become partners at Goldman Sachs. Over 70 Innovator employees will also transition to Goldman Sachs.
Innovator Capital employs a defined outcome strategy, utilizing exchange-traded options to protect investors from market downturns while capping potential upside to offset the cost of protection.
Graham Day noted that advisors are increasingly seeking capital preservation strategies for clients nearing or in retirement. He estimates the defined outcome market’s current size to be between $70 billion and $80 billion, with growth outpacing the traditional ETF sector.
Bryon Lake, Chief Transformation Officer at Goldman Sachs Asset Management, pointed out that as traditional market correlations break down, investors are seeking alternative avenues for market exposure.
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