Goldman Sachs(GS.US) completes acquisition of Innovator Capital, ETF assets rise to $90 billion

Zhitong Finance APP learned that on Thursday, Goldman Sachs (GS.US) announced it has completed its acquisition of Innovator Capital Management, a provider of actively managed exchange-traded funds (ETFs), further expanding the firm’s presence in the fast-growing actively managed ETF space.

Actively managed ETFs are one of the fastest-growing areas in the asset management industry. Against a backdrop in which some passive index products have lagged in returns, actively managed ETFs have attracted investors with their lower costs and flexible strategies.

In December last year, Goldman Sachs said it would acquire Innovator Capital for about $2.0 billion. The company manages 171 ETFs with total assets of approximately $31.0 billion.

Goldman’s CEO David Solomon said, “With this acquisition, we have taken a transformational step in providing investors with proven investment solutions across market cycles.” He added that these solutions are designed to help investors achieve specific investment objectives.

Goldman said that after the transaction closes, Innovator co-founders Bruce Bond and John Sossed will join Goldman as advisory directors; Chief Investment Officer Graham Day and distribution head Trevor Terrell will join as partners. In addition, more than 70 employees at Innovator will join Goldman.

Goldman added that currently, its asset management division globally manages approximately 240 ETFs, with total ETF assets reaching $90.0 billion.

Innovator uses a “defined outcome strategy,” providing downside protection to investors through exchange-traded options while limiting upside gains to help offset the cost of the protection.

Innovator’s Chief Investment Officer Graham Day said, “We’ve found that many clients of investment advisors are in or near retirement stages, and they prioritize capital preservation over capital appreciation.” He noted that the market size for ETFs related to defined outcome strategies is currently between $70.0 billion and $80.0 billion, with a growth rate higher than that of the traditional ETF market.

Byron Lake, Chief Transformation Officer of Goldman’s asset management business, said, “Traditional asset correlations are breaking down, and more and more investors are seeking different ways to gain market exposure.”