Goldman Sachs said Wednesday that it has agreed to acquire Neos Investments in a deal that would bolster Goldman's lineup of income-focused exchange-traded funds. Neos specializes in ETFs that use options-based strategies to generate income.

Goldman is buying Neos for $2.25 billion in cash and equity. Payouts are subject to performance and service commitments. The deal is expected to close in the first quarter of 2027 and is requires regulatory approval.

Shares of Goldman were up 0.4% Wednesday morning. The benchmark S&P 500 index was up 0.2%.

The Neos deal would build on Goldman's acquisition of Innovator Capital Management, which specializes in actively managed defined-outcome ETFs that are intended to mitigate market losses through the use of options contracts.

Founded in 2022, Neos managed $30 billion in assets across 19 options-based income ETFs as of June 30, according to Goldman. Its addition will help Goldman Sachs' asset-management unit meet the needs of investors and financial advisors, according to the company, which has also been seeking to make more inroads with registered independent advisory firms.

David Solomon, chairman and CEO of Goldman Sachs, says Neos' investment approach will complement his company's capabilities across buffer, managed outcome and income strategies. "Together, we will give investors a diverse tool kit for different market environments," Solomon says.

Goldman Sachs Asset Management, Innovator from Goldman Sachs Asset Management, and Neos manage more than $130 billion in ETF assets under supervision (AUS) as of June 30, according to the company.

Citing data from research company Morningstar, Goldman's announcement said the combination of the three companies would create the eighth-largest active ETF manager as of June 30, 2026.

Once the transaction has been completed, Neos co-founders and managing partners Troy Cates and Garrett Paolella will join Goldman Sachs Asset Management as partners.

The acquisition comes amid soaring overall growth for ETFs, which have become investors' preferred investment vehicle because they are easy to trade and are tax efficient. Assets under management in the U.S. ETF industry stood at $15.8 trillion at the end of June, according to data from LSEG Lipper.

In recent years, asset managers have launched a tidal wave of new ETFs, many of them actively managed strategies that are intended to fill specific needs in an investor's portfolio. This year, 900 ETFs have been launched, according to an Aug. 11 research note from Todd Sohn, chief ETF strategist at Strategas Asset Management. "Suffice to say, this locomotive isn't slowing down," Sohn writes.

In October 2023, Goldman launched two active ETFs that use options strategies to generate income, the Goldman Sachs S&P 500 Core Premium Income ETF and the Goldman Sachs Nasdaq-100 Core Premium Income ETF. This week, Goldman Sachs Asset Management said it converted two existing funds into ETFs: the Goldman Sachs Core Plus Bond ETF and the Goldman Sachs Income ETF.