Goldman Sachs announced the acquisition of Neos Investments for up to $2.25 billion
Goldman Sachs announced the acquisition of exchange-traded fund provider Neos Investments for up to $2.25 billion in cash and stock. The deal is part of the bank’s strategy to grow its Asset and Wealth Management division and increase fee income, according to CNBC.
Neos Investments specializes in ETFs that use options strategies to generate income. As of the end of June, the company managed $30 billion in assets across 19 such funds. According to CNBC, these products are becoming increasingly popular among older investors.
This is Goldman Sachs’ second major deal in the ETF market in recent months. The bank recently completed the acquisition of Innovator Capital Management for approximately $2 billion. Innovator offers target-date ETFs. Following the acquisition of Neos, Goldman Sachs announced that it would join the ranks of the top eight providers of actively managed ETFs, with $80 billion in assets under management in such funds. The total size of the bank’s global ETF platform is expected to reach $130 billion.
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This series of acquisitions is part of Goldman Sachs CEO David Solomon’s strategy to grow the firm’s asset and capital management business. Fee income from this division is typically more stable and less susceptible to cyclical fluctuations than investment banking revenue. Goldman Sachs’ closest competitor, Morgan Stanley, has also been expanding its presence in this area: in 2021, it acquired ETF provider Eaton Vance, and in 2020, it acquired the brokerage platform E-Trade.
Goldman Sachs shares were virtually unchanged in the second half of Wednesday’s trading session, in line with the performance of the financial sector within the S&P 500 index. The index itself was rising and on track to break a two-day losing streak. The market was also buoyed by consumer price index data, which came in line with expectations and reduced expectations of a Federal Reserve rate hike in September, according to the CME Group’s FedWatch tool.
