Goldman Sachs Group Inc (NYSE:GS, XETRA:GOS) will acquire exchange-traded funds provider Neos Investments in a deal valued at up to $2.25 billion, the bank said Wednesday, deepening its push into the fast-growing derivative income ETF market.
The Connecticut-based ETF issuer manages roughly $30 billion across 19 options-based income ETFs, according to data cited by Jefferies.
The acquisition follows Goldman's deal late last year to buy ETF operator Innovator Capital Management for $2 billion. Once the Neos transaction closes, Goldman's combined ETF assets will total $130 billion.
The deal, expected to close in the first quarter of 2027, will be paid in a mix of cash and equity, with a portion tied to asset retention and performance targets, according to Jefferies. Neos co-founders Troy Cates and Garrett Paolella will join Goldman Sachs Asset Management as partners when the deal closes, with the rest of the Neos team expected to follow.
Neos specializes in systematic options-based income strategies, writing index option overlays on equity, fixed income and alternative exposures within a tax-efficient ETF structure. Its flagship funds include SPYI, the S&P 500 High Income ETF with about $11.3 billion in assets; QQQI, the Nasdaq-100 High Income ETF with about $13.9 billion; and IWMI, the Russell 2000 High Income ETF with about $1.1 billion. The firm has also launched hedged equity, alternatives and enhanced fixed income products, including its bitcoin-linked BTCI fund.
Neos has posted year-to-date inflows of about $13 billion. Jefferies noted that the four largest funds have seen annualized organic growth well above industry levels, with QQQI up 143%, IWMI up 236%, BTCI up 104% and SPYI up 101% as of July 31.
As a percentage of assets under management, Goldman is paying about 7.5% for Neos, in line with its Innovator Capital acquisition at roughly 7.1% of AUM and above older deals for specialty ETF franchises struck before the rise of active and derivatives-based ETFs.
The derivative income ETF category has grown to about $180 billion in industry-wide assets, compounding at more than 70% annually since 2021, according to Morningstar data cited by Jefferies.
Combined with its existing options-based ETF lineup, the acquisition positions Goldman Sachs Asset Management among the top eight active ETF providers, with about $80 billion in active ETF assets.