Goldman Acquires ETF Pioneer to Ride Active Investment Surge

Goldman Sachs Group Inc. has agreed to acquire Innovator Capital Management, a pioneer in defined-outcome exchange-traded funds (ETFs), for $2 billion in a deal combining cash and equity, marking a strategic expansion into one of the fastest-growing segments of the asset management industry. The acquisition, expected to close in the second quarter of 2026, will add $28 billion in assets under supervision (AUS) across 159 ETFs to Goldman Sachs Asset Management's portfolio, significantly broadening its active ETF offerings and reinforcing its position in a market that has grown at a 47% CAGR since 2020.

Defined-outcome ETFs, which use derivatives and options-based strategies to target specific investor objectives such as downside protection or yield enhancement, have surged in popularity as investors seek tailored risk management solutions. Innovator, co-founded in 2017 by Bruce Bond and John Southard, has become the second-largest provider of these structured products, trailing only First Trust. The firm's $28 billion in AUS underscores its leadership in a niche that has grown at a 66% CAGR since 2020, driven by demand for income-generating alternatives to bonds and strategies to hedge against market volatility.

Goldman Sachs CEO David Solomon emphasized the transaction's alignment with the bank's broader strategy to innovate in active ETFs, describing the category as "dynamic, transformative, and one of the fastest-growing segments in today's public investment landscape." The acquisition addresses a gap in Goldman's existing ETF lineup, which has struggled to gain traction with its own buffer ETFs-launched earlier this year but amassing only $36 million in assets. By integrating Innovator's established platform, Goldman aims to leverage its track record and advisor network to enhance client access to structured solutions.

The deal reflects a broader industry shift as investors move away from passive strategies amid tighter monetary policy. Active ETFs, which lost ground during the zero-rate era, are regaining favor as market conditions demand more hands-on portfolio management. Innovator's expertise in defined-outcome structures positions Goldman to capitalize on this trend, particularly as structured products attract $11.4 billion in net inflows this year alone.

Critics, however, remain skeptical about the complexity and performance of buffer funds. Hedge funds like AQR have argued that such products deliver subpar returns relative to simpler alternatives, while regulatory scrutiny has intensified over their risk profiles. Despite this, demand persists, with Innovator capturing $4.1 billion of the $11.4 billion allocated to structured outcomes in 2025.

Goldman's acquisition also aligns with its broader asset management strategy, which includes a $1 billion investment in T. Rowe Price and the recent acquisition of venture capital firm Industry Ventures. The move underscores the bank's commitment to expanding durable revenue streams through wealth management and alternative investments, a pivot from its traditional consumer banking focus.

With the transaction, Innovator's 60 employees will join Goldman's asset management division, bringing decades of combined experience in ETF innovation. The firm's leadership, including Co-Founder Bruce Bond and President John Southard, will retain key roles, ensuring continuity in product development and distribution.

As the deal progresses, market participants will closely watch how Goldman integrates Innovator's strategies into its broader portfolio. The acquisition's success hinges on its ability to scale structured ETFs while addressing concerns about complexity and performance-a challenge that will define the future of this high-growth segment.