Goldman doubles down on active ETFs with $2.3 billion Neos deal
GS•Goldman to acquire Neos Investments for up to $2.25 billion
Aug. 12 (Reuters) - Goldman Sachs will acquire exchange-traded funds provider Neos Investments for as much as $2.25 billion, as the investment bank looks to bolster its presence in active asset management.
Neos manages $30 billion in assets across 19 ETFs that cover a suite of index products, while using options to generate additional income and cap downside risk.
Demand for such products has surged of late, as institutions look to hedge portfolios with investments that help cushion drawdown risk and provide recurring income in a volatile market environment.
Goldman has pursued acquisitions in the actively managed ETF space to strengthen its asset management unit and capitalize on the growing demand. The Wall Street giant completed the $2 billion buyout of Innovator Capital, which also employs an options-based ETF, earlier this year.
Goldman expands active ETFs as asset management revenue grows
"The deal capitalizes on the accelerating adoption of derivative income ETFs and deepens durable A&WM (asset and wealth management) revenues," analysts at Jefferies said in a note.
Neos has returned about 19% over a one-year period through June in its flagship S&P 500 high-income ETF, while total returns in the fund since inception are close to 15%, according to the firm's website.
"As investor demand for active ETFs grows, Neos' disciplined investment approach is highly complementary to our capabilities across buffer, managed outcome and income strategies," Goldman CEO David Solomon said in a statement.
