“Goldman Sachs Makes a $2 Billion Bet on ‘Boomer Candy,’” reads one of yesterday’s WSJ headlines. Everyone, take cover. Because when it comes to money, Goldman isn’t in it to lose it. ‘Boomer Candy’ refers to defined outcome funds, or buffered ETFs. The funds use options to reduce investors’ downside risk, but also limit potential returns. The WSJ reports:
Goldman Sachs on Monday said it would acquire Innovator Capital Management for about $2 billion, a bet on a fast-growing corner of the exchange-traded fund market that has been called candy for the retired baby-boomer crowd.
Innovator supervised some $28 billion in assets across 159 funds, as of Sept. 30. The company has a special focus on so-called defined-outcome funds, or buffer funds, which use options contracts to offer investors protection from market downturns while retaining access to some of the gains.
Baby boomers and people close to retirement have flocked to the funds as a way to stay invested in the market even while trying to remain conservative, earning buffer funds and others like them the nickname “boomer candy.”
Goldman said the deal would make its asset-management arm a top 10 provider of active ETFs.
It is the latest acquisition by the Wall Street firm to broaden its offerings to clients outside of traditional investing and furthers Chief Executive David Solomon’s goal of building up the bank’s asset-management division.
In October, Goldman said it would acquire venture-capital firm Industry Ventures for up to $965 million. The firm in September said that it would invest $1 billion in asset manager T. Rowe Price and that the two would collaborate to bring a slice of private-market investments to 401(k)s.
Action Line: If you are interested in buying ‘Boomer Candy,’ be sure to do your due diligence. The last craze in funds was ESG, which was a money grab of epic proportions. When you want to talk about a plan for your retirement, email me a ejsmith@yoursurvivalguy.com. And click here to subscribe to my free monthly Survive & Thrive letter.
