Goldman Sachs pays up for downside protection
GS•The price of buying growth
NEOS specializes in so-called covered call strategies, which involve simultaneously using options and the underlying stocks or indexes in order to generate monthly premium income. Assets in derivative income funds, like the ones NEOS is known for, have risen 70% a year since 2021, outpacing the overall ETF market, according to data from Morningstar.
The latest deal also highlights how expensive it may be for Solomon to narrow the gap with Morgan Stanley, which oversees nearly $10 trillion. At $2.3 billion, Goldman is paying roughly 7.5% of NEOS’s assets. That is well above what buyers historically have paid in similar transactions. For instance, BlackRock's $15 billion acquisition of Barclays Global Investors in 2009 represented roughly 1% of its $1.3 trillion ETF business. Morgan Stanley paid about $7 billion for Eaton Vance in 2020, or approximately 1.4% of assets under management. Goldman paid a similar multiple for Innovator Capital Management last year, though that firm specializes in buffer funds, a similarly fast-growing corner of the market.
