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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.
“By acquiring Innovator, Goldman Sachs will expand access to modern, world-class investment products for investor portfolios,” Goldman chief executive David Solomon said 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, 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.
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.
“This transaction is a pivotal milestone for our business,” said Innovator boss Bruce Bond. “Goldman Sachs has a long history of discerning emerging trends and important directional shifts within the asset management industry.”
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.
Additional reporting by Steve Johnson in London