Goldman Sachs Acquires Innovator Capital Management for $2 Billion
In a significant move that reflects the ongoing dynamics between Wall Street and Main Street, Goldman Sachs has decided to acquire Innovator Capital Management, a Wheaton-based ETF investment firm that launched just eight years ago, for $2 billion.
Established in 2017, Innovator provides retail investors with a lineup of exchange-traded funds designed to limit downside risk while capping potential returns, offering a more affordable and approachable option compared to traditional hedge funds and pension funds.
The company pioneered the defined outcomes ETF model and has experienced swift growth, seeing assets under management rise to nearly $30 billion by November.
“A lot of investors are hesitant to dive into the stock market because they fear the risks involved,” explained Graham Day, Innovator’s chief investment officer since the company’s inception. “Our approach serves as a tool to encourage and sustain investor involvement.”
Located about 900 miles from the hedge fund hubs of New York and Connecticut, Innovator is making a mark with its innovative ETF model, which is reshaping how risk is managed in unpredictable economic climates.
The firm attracts a diverse range of investors—including universities, retirees, and others—who are interested in capitalizing on the potential for higher stock returns compared to cash or bonds, even with the caps on gains, while also minimizing losses.
Its flagship offering, the Power Buffer ETF (ticker symbol PDEC), shields the first 15% of losses over the year while limiting gains to 13.14%. Innovator also charges a relatively low management fee of 0.79%.
“Having a clear level of downside protection while investing in the S&P 500 can make a big difference in overcoming various challenges,” Day added. “Putting it all in an ETF format makes it so much more accessible.”
Goldman Sachs plans to pay Innovator approximately $2 billion in cash and stock, contingent on performance metrics, with the deal anticipated to finalize in the second quarter of 2026, pending regulatory checks.
Innovator’s current team of 60 employees will integrate into Goldman Sachs and continue operations from their Wheaton headquarters.
This acquisition is expected to substantially enhance Goldman’s ETF offerings.
“Innovator’s reputation for creativity and leadership in providing effective solutions aligns perfectly with our goal of improving customer experiences with sophisticated strategies aimed at achieving clear results for investors,” stated David Solomon, chairman and CEO of Goldman Sachs, in a press release.
The Innovator team, based in their namesake office building on Front Street in Wheaton, has been quietly thriving in the charming DuPage County area, historically recognized as the educational birthplace of evangelist Billy Graham, who went to Wheaton College.
Founded by Bruce Bond and John Southard, Innovator has transformed Wheaton into a hotspot for ETFs. The duo previously started PowerShares in 2003 in the same area, which became known for the highly regarded NASDAQ-100 ETF, QQQ, now under Invesco’s ownership.
Bond and Southard sold PowerShares in 2006 for $60 million but returned to the ETF landscape in 2017 with Innovator, promoted as the first Defined Outcome Buffer ETF globally.
By incorporating options as a form of downside protection, they effectively converted stock investments into straightforward ETFs, crafting an alternative investment model that has resonated with financial advisors, retirees, and institutions due to lower costs and clearer risks, along with some tax benefits, compared to hedge funds.
Despite new competitors emerging in the buffer ETF market, Innovator has stayed ahead, experiencing impressive growth since its inception, amassing nearly $30 billion in assets.
With the sale of Innovator to Goldman Sachs, Bond and Southard will reap the rewards of their hard work as well.
“This deal marks a pivotal moment for our business,” Bond noted in a press release.
