Goldman Sachs announced on Thursday that it had successfully acquired Innovator Capital Management, an active exchange-traded fund provider, increasing the Wall Street bank’s footprint in the rapidly expanding active ETF market.
At a time when returns from some passive index products have lagged, investors are drawn to active exchange-traded funds (ETFs) due to their flexible strategies and reduced costs.
In December, the bank announced that it would pay roughly $2 billion to purchase Innovator Capital, which managed 171 ETFs with approximately $31 billion in assets.
David Solomon, CEO of Goldman Sachs, stated, “With this acquisition, we have taken a transformative step in our commitment to provide sophisticated investment solutions that are designed to deliver specific outcomes for investors through market cycles.”
Following the transaction, Goldman Sachs announced that Chief Investment Officer Graham Day and Head of Distribution Trevor Terrell would become partners. In contrast, Innovator’s co-founders Bruce Bond and John Southard would become advising directors.
Goldman Sachs stated that the company will hire about 70 Innovator staff members.
According to the firm, Goldman Sachs Asset Management currently manages 240 ETFs worldwide, with a total of $90 billion in ETF assets under supervision.
Innovator employs exchange-traded options as part of a so-called defined outcome strategy to shield investors from market declines while offering limited upside to assist in covering the cost of such protection.
We discovered that many advisors had clients who were either retired or in the pre-retirement stage.
Graham Day told reporters that they are prioritizing capital preservation over capital appreciation.
According to him, the defined outcome industry is currently worth between $70 billion and $80 billion and is expanding more quickly than the conventional ETF market.
“Traditional linkages are disintegrating. As a result, an increasing number of investors are searching for other methods to gain market exposure, according to Bryon Lake, Chief Transformation Officer at Goldman Sachs Asset Management.
