Goldman Sachs Asset Management is placing a major strategic wager on the growing market for defined outcome exchange-traded funds, commonly known as buffer ETFs. The firm recently agreed to acquire Innovator Capital Management, a pioneer in the space, for $2 billion, signaling its conviction that these products will be a significant future growth driver for the investment industry.

These ETFs use options strategies to offer investors exposure to equity markets while providing a predetermined level of protection against losses—a "buffer"—over a specific outcome period, often one year. In exchange for this downside cushion, investors typically agree to cap their potential upside gains. "We're really excited about this space that they’ve invented," said Bryon Lake, co-head of Goldman's Third-Party Wealth team, highlighting that the funds address core investor needs for income, downside protection, and growth potential.

Meeting Demand for Smoother Equity Exposure
The acquisition underscores a rising demand for tools that mitigate market volatility without abandoning equity exposure altogether. Financial advisors and asset managers are increasingly incorporating these ETFs into client portfolios as a risk-management component. Nick Ryder, Chief Investment Officer at Kathmere Capital Management, which uses the products, noted their appeal lies in offering stock market participation with a built-in safety net. "Equities go up, and they go down... the ride is anything but smooth," Ryder said. "This category of these risk-managed equity solutions... plays a role in a portfolio."

For firms like Goldman Sachs, the defined outcome ETF space represents a high-growth niche within the broader ETF universe. By acquiring Innovator, Goldman gains immediate scale and expertise in a product category that resonates strongly with retail investors and advisors seeking to engineer more predictable investment outcomes, particularly in uncertain markets. The deal, expected to close in the first half of next year, positions Goldman to capitalize on the ongoing convergence of asset management, structured products, and the massive ETF wrapper.