Goldman Sachs Asset Management is doubling down on the growing defined outcome ETF market, also known as buffer ETFs.
These products use options strategies to offer investors downside protection while maintaining exposure to equities.
This month, Goldman Sachs agreed to acquire Innovator Capital Management, a leading provider of defined outcome ETFs, for $2 billion.
The deal is expected to finalize in the first half of next year, marking a major strategic move for Goldman Sachs in the ETF space.
Bryon Lake, co-head of Goldman’s Third-Party Wealth team, highlighted the firm’s enthusiasm for the sector.
“We did this deal with Innovator. We’ve loved that business for years. We’ve known the founders. We’ve known the team. We’re really excited about this space that they’ve invented, the defined outcome space,” Lake said on CNBC’s “ETF Edge.”
Lake emphasized that defined outcome ETFs are highly attractive because they solve distinct investor problems.
“They’re looking for income. They’re looking for downside protection. They’re looking for further growth,” he explained.
Growing Popularity Among Wealth Managers
Kathmere Capital Management, which manages $3.4 billion in assets, has been actively incorporating ETFs into client portfolios.
Nick Ryder, the firm’s chief investment officer, described how defined outcome ETFs are used alongside strategies like trend-following and covered calls to mitigate risk.
“There’s both a client demand for these and we also see a role for them in portfolios,” Ryder said.
He added that the appeal lies in providing stock market exposure with a built-in safety net.
“Equities go up, and they go down. Over the long haul, they tend to work their way upwards to the right. But we know as through years of experience… the ride is anything but smooth,” Ryder explained.
“For us, this category of these risk-managed equity solutions… plays a role in a portfolio, and that’s where our adoption is really driven by.”
Strategic Rationale
Goldman’s acquisition signals a major bet on a sector that combines growth potential with investor protection.
Defined outcome ETFs are particularly attractive for clients seeking steady income, capital preservation, and long-term participation in equities.
As these funds continue to gain popularity, wealth managers see them as essential tools to balance portfolio growth with risk management.
With Innovator’s proven track record, Goldman aims to expand the reach of defined outcome ETFs while integrating them into its broader wealth management offerings.
Market Outlook
Industry experts expect defined outcome ETFs to continue growing rapidly in the coming years.
The combination of risk mitigation and upside potential appeals to a broad range of investors, from conservative retail clients to institutional portfolios.
As Lake noted, the sector is “fast and attractive,” offering opportunities for firms like Goldman Sachs to scale offerings while capturing increasing client demand.
