Goldman Sachs is buying ETF provider Innovator Capital Management for $2bn, the latest acquisition by the US investment bank to bolster its asset management business.
Innovator deals in so-called defined outcome ETFs that use derivatives to hedge against falling markets. Through the deal, Goldman will add $28bn in assets under supervision to the $3.45tn the bank had at the end of the third quarter.
“As we got to know the company, it became clear that this would really help us accelerate growth in an area that we wanted to be bigger in, the active ETF space,” Marc Nachmann, Goldman’s head of asset and wealth management, told the Financial Times on Monday.
Goldman said its asset management division combined with Innovator manages more than 215 ETF strategies globally, representing $75bn in total assets under supervision.
Following an ill-fated expansion into retail banking, Goldman chief executive David Solomon has centred on growth in asset and wealth management as cornerstones of his efforts to make Goldman’s revenue and profit less reliant on volatile investment banking and trading.
Not all of Goldman’s recent forays into ETFs have proved successful, though. In May it closed down its ETF Accelerator, designed to facilitate the launch of third-party funds, after failing to find a buyer. Announced to much fanfare in 2022, the “white label” venture failed to reach critical mass, attracting only several issuers.
Monday’s deal for Innovator is in keeping with recent transactions by Goldman in asset management. They have tended to be bolt-on deals that expand its expertise but not the sort of large-scale acquisition such as those pursued by rival Morgan Stanley through ETrade and Eaton Vance.
In October, Goldman agreed to buy venture capital investment firm Industry Ventures for just under $1bn. It also bought Dutch insurer NN Group’s investment management unit for about €1.6bn in 2022. Goldman Sachs also recently agreed to invest as much as $1bn in US asset manager T Rowe Price.
“Core to our strategy is organic growth,” Nachmann said. “We’re trying to also have an open mind to add businesses that will accelerate that growth by adding capabilities or filling specific areas where we’re not as big in.”
The $2bn that Goldman has agreed to pay for Innovator will be a mix of cash and stock, subject to certain performance targets. Goldman expects the deal to close in the second quarter of 2026.
Todd Rosenbluth, head of research at TMX VettaFi, a consultancy, said options-based ETFs such as those offered by Innovator “have appealed to advisers that seek to support clients with risk mitigation equity objectives”.
The popularity of the defined outcome ETFs that Innovator specialises in has grown rapidly in recent years. The market for these products totalled almost $50bn in assets at the end of 2024, according to Morningstar, a 10-fold increase since 2020.
