Goldman Sachs to buy NEOS for $2.25 billion in ETF push

Goldman Sachs agreed to acquire options-income ETF provider NEOS Investments for up to $2.25 billion, vaulting its active ETF platform past $130 billion and into the top eight among active ETF managers. The cash-and-equity deal, announced Wednesday, is expected to close in the first quarter of 2027, subject to regulatory approval.

"As investor demand for active ETFs grows, NEOS' disciplined investment approach is highly complementary to our capabilities across buffer, managed outcome and income strategies," David Solomon, chairman and chief executive officer of Goldman Sachs, said. "Together, we will give investors a diverse toolkit for different market environments."

NEOS, founded in 2022 and based in Westport, Connecticut, manages $30 billion across 19 options-based income ETFs as of June 30. The combination creates the eighth-largest active ETF manager, with $80 billion in active ETFs across a $130 billion global ETF platform, according to Morningstar. Industry-wide, derivative income ETFs have grown to roughly $180 billion in assets under management, posting a compound annual growth rate of more than 70 percent since 2021.

The deal follows Goldman's roughly $2 billion acquisition of Innovator Capital Management about a year ago, forming what the firm calls a broad options-based ETF franchise. The transaction consideration of up to $2.25 billion in cash and equity is subject to the achievement of certain performance and service commitments. NEOS co-founders Troy Cates and Garrett Paolella will join Goldman Sachs Asset Management as partners, with the full NEOS team expected to transfer.

Goldman Sachs Asset Management oversees about $4 trillion in assets under supervision as of June 30, with the asset and wealth management division posting $4.60 billion in revenue in the second quarter, up 20 percent year over year. The acquisition expands the firm's more durable revenue and reinforces its push into active, tax-efficient income strategies as wealth demand grows globally.

The move intensifies competition in the fast-growing active ETF market, where BlackRock, Vanguard and JPMorgan Asset Management have all expanded options-based and defined-outcome offerings. NEOS has drawn inflows with flagship funds delivering double-digit returns and monthly income distributions, while highlighting favorable tax treatment to boost after-tax returns. Marc Nachmann, who leads Goldman's asset management business, described active ETFs as "a fast growing space in the asset-management business."

The deal reflects a broader shift in asset management toward fee-generating active strategies as passive index funds squeeze margins across the industry. Options-based income ETFs appeal to investors seeking yield in a period of interest-rate volatility, with the transparent, tax-efficient ETF wrapper adding to their draw. Goldman's purchase price of up to $2.25 billion values NEOS at roughly 7.5 percent of its assets under management, a premium reflecting the platform's growth trajectory and the strategic value of its distribution.

With the transaction expected to close in the first quarter of 2027, Goldman is building its asset management arm to capture a larger share of the roughly $180 billion derivative income ETF market. If the deal clears regulatory review, the combined franchise would rank among the top eight active ETF managers globally, giving Goldman a platform to cross-sell options strategies to its wealth clients and institutional base. The firm expects complementary sales and marketing capabilities to drive growth, with NEOS' brand and distribution preserved under the Goldman umbrella. For investors, the deal shows that large asset managers are willing to pay premiums for options-based income platforms, a category that has become one of the fastest-growing in the ETF industry.

Goldman Sachs was advised by Goldman Sachs Global Banking & Markets as financial advisor, with Wachtell, Lipton, Rosen & Katz and Willkie Farr & Gallagher LLP as legal counsel. Barclays served as exclusive financial advisor to NEOS, with Ropes & Gray LLP as legal counsel.

This article is for informational purposes only and does not constitute investment advice.