ByHank Tucker,
Forbes Staff.
With investors getting increasingly anxious about the nosebleed valuations of public stocks, Goldman Sachs announced Monday morning that it’s spending $2 billion to buy Innovator Capital Management, a firm that will cushion its clients from a crash.
Wheaton, Illinois-based Innovator manages $28 billion in assets, mostly in defined-outcome ETFs which use options contracts to shield investors from the stock market’s losses up to a defined buffer, in exchange for a cap that limits the funds’ upside. Given the market’s increased volatility, these relatively expensive “safety-first” ETFs are especially popular among retirees and investors approaching retirement. Despite criticism from billionaire hedge fund manager Cliff Asness and other investing pros that investors sacrifice too much in this trade, Innovator has grown rapidly since it launched its first buffer fund in 2018. Inflows to its 159 ETFs this year have totaled more than $4 billion.
The sale was the second big payday for Innovator’s CEO Bruce Bond and his cofounder John Southard, after the duo sold their first ETF business, PowerShares Capital Management, to Invesco in 2006 for $260 million.
