Key Takeaways
- •Goldman Sachs is set to acquire Innovator Capital Management for $2 billion, significantly expanding its presence in the active Exchange Traded Fund (ETF) market.
- •Innovator manages $28 billion in assets across 159 defined outcome ETFs, which have seen strong adoption among financial advisors.
- •The acquisition will add 215 ETF strategies to Goldman Sachs' portfolio, positioning it among the top ten active ETF providers globally.
Deal Overview
Goldman Sachs has announced its intention to acquire Innovator Capital Management for $2 billion. This strategic move aims to substantially boost Goldman Sachs' footprint in the rapidly growing active ETF market. The transaction is structured as a combination of cash and equity, and its finalization is contingent upon meeting performance targets and receiving regulatory approvals.
Innovator Capital Management currently oversees approximately $28 billion in assets under management. Its product suite includes 159 defined outcome ETFs, which are designed to offer investors structured investment solutions that incorporate risk buffers. These ETFs employ sophisticated options-based strategies to manage both risk and potential returns over predefined outcome periods, appealing to investors seeking specific investment profiles.
Upon completion of the acquisition, Goldman Sachs' ETF assets under supervision are projected to exceed $75 billion, encompassing more than 215 distinct strategies. This expansion is expected to propel the firm into the ranks of the top ten active ETF providers worldwide, with the deal anticipated to close in the second quarter of 2026.
Surge in Defined Outcome ETFs
Defined outcome ETFs have experienced a remarkable surge in popularity in recent years. Since 2020, this segment of the ETF market has grown at a compound annual growth rate of 66%. Investors are increasingly turning to these innovative funds as a means to pursue specific financial objectives, such as achieving downside protection or targeting particular gains, all while preserving the tax efficiency that ETFs are known for.
Integration of Innovator Team and Platform
A significant component of the acquisition involves the integration of over 60 Innovator employees into Goldman Sachs Asset Management. This includes Innovator's co-founders, Bruce Bond and John Southard, who will bring their extensive expertise to the firm. Following the transaction, the Innovator team will be integrated into Goldman Sachs' Third-Party Wealth and ETF divisions.
The leadership team at Innovator collectively possesses over 70 years of experience within the ETF industry. Their deep knowledge and established track record are expected to add significant value to Goldman Sachs' existing investment offerings. Goldman Sachs has indicated its intention to maintain Innovator's current service providers and preserve its operational framework, ensuring a smooth transition for existing clients and strategies.
This acquisition aligns with Goldman Sachs' broader strategic objective to expand its durable revenue streams through strategic acquisitions. The firm has recently made notable investments in T. Rowe Price and Industry Ventures, demonstrating a commitment to growth in high-potential investment categories. The Innovator deal is a further step in this direction, aimed at serving the evolving needs of its client base and solidifying its position in key market segments.
The transaction is designed to enhance Goldman Sachs' ETF product roadmap and improve its competitive standing against larger asset management firms. Industry observers anticipate that this acquisition will provide Goldman Sachs with a distinct competitive advantage in the burgeoning structured outcome ETF space, a market segment showing significant potential for continued expansion.
Advisory Teams
Goldman Sachs acted as its own financial advisor for this transaction, with legal counsel provided by Wachtell, Lipton, Rosen & Katz and Willkie Farr & Gallagher. Innovator Capital Management received financial advisory services from Oppenheimer & Co. and legal counsel from Vedder Price.