Goldman Sachs to pay $2B for ETF issuer Innovator Capital

Goldman Sachs will pay $2 billion to buy Innovator Capital Management, a deal that combines the bank with an issuer of a relatively new type of exchange-traded fund that has caught the attention and ire of some on Wall Street.

Wheaton, Illinois-based Innovator — which has more than $28 billion of assets under supervision in more than 150 ETFs — specializes in defined-outcome ETFs, which seek to limit investors' downside risk in exchange for capping upside potential and have been popular among financial advisors looking to protect client portfolios.

"You get the existing platform and the track record," Marc Nachmann, Goldman global head of asset and wealth management, said in an interview. "They already have $28 billion and have a broad following around the advisor community. That head start does matter."

Led by Bruce Bond since he co-founded the firm with John Southard in 2017, Innovator launched the first defined-outcome ETFs, sometimes called "buffer funds," in 2018. The firm is now the second-largest provider of buffers behind asset manager First Trust, which is also based in Wheaton.

ETF buffers hedge risk but limit upside

Buffers have grown in popularity over the last several years as investors seek safety from market volatility and look for income-generating alternatives to bonds. Investors have plowed roughly $11.4 billion into structured outcome products this year — a category that includes buffers. About $4.1 billion has gone to Innovator's offerings, according to data compiled by Bloomberg Intelligence.

Since their inception, the products have been touted by industry heavyweights like BlackRock and also have drawn staunch criticism from hedge funds including AQR, which say buffer funds and other options-based products deliver lower returns with more risk than simpler alternatives.

Goldman Sachs Asset Management's own foray into the buffer ETF space has met with a lukewarm market reception to date, something that the Innovator acquisition could help improve. Goldman debuted a trio of U.S. large-cap buffer ETFs in January and March of this year, and they have amassed a combined $36 million in assets. The structured outcome ETF category has grown from under $60 billion at the end of 2024 to roughly $76 billion currently, Bloomberg Intelligence data show.

The acquisition will also instantly vault GSAM's assets under management from $51 billion in ETFs, according to Bloomberg Intelligence data, to $79 billion, putting the firm among the 10 largest active issuers.

Goldman Sachs building on recent acquisitions

Goldman has made a series of deals in the past three months on its own balance sheet, including the acquisition of venture-capital investor Industry Ventures and a $1 billion investment in T. Rowe Price Group Inc. Top executives have said Goldman is open to further acquisitions, particularly to complement its push into private markets in the battle against larger players like Blackstone and KKR.

Innovator's team of more than 60 employees is expected to join Goldman's third-party wealth and ETF teams, according to a company statement. The deal is planned to close in the second quarter of 2026, pending regulatory approvals.

Goldman's asset and wealth management unit had about $3.5 trillion under supervision at the end of September, according to its statement.