Goldman Sachs Asset Management is making a big bet on the rapid growth of buffer ETFs, agreeing to acquire Innovator Capital Management in a deal valued at about $2 billion in cash and stock.
The transaction announced Monday will add roughly $28 billion in assets under supervision and 159 defined outcome ETFs to Goldman’s lineup of active ETFs and custom portfolio solutions, pending regulatory approvals expected to wrap up in the second quarter of 2026.
With the purchase, Goldman and Innovator will oversee more than 215 ETF strategies globally and over $75 billion in total assets under supervision, which the firm says will place it among the top 10 active ETF providers.
Innovator’s senior leadership team, including co-founders Bruce Bond and John Southard, as well as chief investment officer Graham Day and distribution head Trevor Terrell, is slated to join Goldman’s third-party wealth and ETF units alongside more than 60 Innovator employees.
Defined outcome ETFs, also known as buffer ETFs, package options strategies inside an ETF wrapper to offer targeted levels of downside protection and upside participation over a set outcome period. That structure has resonated with advisors and investors rattled by geopolitical and economic uncertainty.
At the end of 2024, buffer products represented 40% of all listed derivatives-based equity ETFs, giving them the lion's share of the category by count, according to CFRA Research.
Goldman has already been expanding its presence in the segment. Earlier this year, it rolled out the Goldman Sachs US Large Cap Buffer 3 ETF, which offers quarterly resetting downside protection in the 5% to 15% range in exchange for capping upside between 5% and 7%.
“The feedback we were getting from clients was, I’m in the marketplace. I can live with down a few percent. That’s kind of like what I expect. It gets painful when I’m talking down 5 to down 15,” Brendan McCarthy, global head of ETF distribution at Goldman Sachs Asset Management, told CNBC in March.
According to a joint paper put out by Cerulli and Innovator ETFs last month, defined outcome ETF assets could more than quadruple to in excess of $334 billion by 2030, implying a five-year compound annual growth rate of up to 35%, compared with about 15% for the broader ETF market.
The research also highlights why advisors may be leaning into downside-protection tools: In a recent survey of affluent investors, 68% said they prefer portfolios that limit losses even if it means giving up some upside.
“Traditional risk mitigation strategies offer diversification and stability, yet they often fall short on providing the certainty that clients increasingly seek,” said Daniil Shapiro, director at Cerulli, in the report.
Earlier research by Cerulli found defined outcome ETFs gaining traction among investors at large, garnering $50.8 billion in net assets since the category was created seven years ago. There's still more runway to go, however, as advisor uptake is still limited, and just 13% of asset managers that offer alternative investment strategies have defined outcome ETFs on the menu.
Todd Rosenbluth, head of Research & Editorial with TMX VettaFi noted that Goldman Sachs has refocused its ETF efforts this year, with strong growth driven in part by its option-based strategies, and he expects Innovator's strong brand name in the defined outcome space will be a key catalyst.
"Options-based ETFs have appealed to advisors that seek to support clients with risk mitigation equity objectives," Rosenbluth said.
For Innovator, which helped establish the buffer ETF category in 2018, the deal offers a global platform and deeper distribution into wirehouses, broker-dealers, and RIAs.
“This transaction is a pivotal milestone for our business,” Bond said in the announcement. “Goldman Sachs has a long history of discerning emerging trends and important directional shifts within the asset management industry.”
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