This story was originally published on Banking Dive. To receive daily news and insights, subscribe to our free daily Banking Dive newsletter. Goldman Sachs will buy exchange-traded fund issuer Innovator Capital Management for $2 billion in cash and equity, the bank announced Monday, bringing $28 billion of additional assets under Goldman’s supervision. The deal significantly expands Goldman’s ETF offerings and future product roadmap, the Wall Street bank said, bringing assets across 159 defined outcome ETF ...

Investment Flows - Investors are allocating capital into active ETFs [1] - The trend indicates a shift of assets into the ETF structure rather than a renewed focus on alpha-seeking strategies [1]

Core Insights - The SEC's 2019 ETF rule has significantly streamlined ETF product development, leading to a surge in new ETF launches, particularly benefiting active ETFs in the bond market [1][2] - The Avantis Core Fixed Income ETF (AVIG), launched in October 2020, exemplifies the active ETF approach to core bond funds, charging a competitive fee of just eight basis points [2][3] - AVIG focuses on global investment-grade debt securities, aiming for a weighted average maturity close to that of the Bloomberg Barclays U.S. Aggregate Bond Index, and employs an analytical approach to assess expected income and capital appreciation [2][3] Performance and Appeal - AVIG's strategy emphasizes outperformance and lower costs, distinguishing it from traditional mutual fund core bond offerings, while providing greater transparency and flexibility [3] - The active management of AVIG allows for quicker adaptation to market changes, such as replacing defaulted securities more efficiently than passive funds [3] - Year-to-date, AVIG has returned 7%, indicating strong performance and making it an appealing option for investors looking to refresh their core bond allocations [3]

Financial Data and Key Metrics Changes - MSCI reported organic revenue growth of 9%, adjusted EBITDA growth of 10%, and adjusted earnings per share growth of over 15% in Q3 2025 [6] - The company repurchased $1.25 billion worth of shares in Q3, bringing year-to-date repurchases to over $1.5 billion, with an additional $3 billion authorized for future repurchases [6] Business Line Data and Key Metrics Changes - The index franchise achieved recurrent net new subscription sales growth of 27%, with 43% growth in the Americas [7] - Total AUM in investment products linked to MSCI indices reached $6.4 trillion, including $2.2 trillion in ETFs and $4.2 trillion in non-ETFs [7] - Analytics delivered recurrent net new sales growth of 16%, driven by strong adoption of risk tools and equity models by hedge funds [8] - Subscription run rate growth for wealth managers was nearly 11%, while asset owners posted 9% growth [12][14] - Subscription run rate growth for banks and broker dealers was 9%, with a record level of recurring sales [15] Market Data and Key Metrics Changes - Equity ETFs linked to MSCI indexes captured $46 billion of inflows during Q3 2025 [17] - The index retention rate remained durable at nearly 96% [17] - Sustainability and climate solutions saw an 8% subscription run rate growth, with climate solutions growing at 16% [19] Company Strategy and Development Direction - MSCI is focusing on expanding its presence in private credit and enhancing its client segmentation strategy [10][25] - The company is leveraging AI to enhance existing products and develop new capabilities, aiming for significant value creation for shareholders [9][41] - MSCI is committed to helping the active asset management industry recover by creating new products, particularly in the active ETF space [31][60] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about long-term opportunities and the ability to drive growth from recent innovations [16] - The company is seeing solid momentum in delivering new products and capabilities, translating into tangible results [21] - Management acknowledged challenges in the sustainability and climate segment but emphasized the potential for monetization through indices [54] Other Important Information - MSCI launched a private credit factor model and a new global taxonomy for private assets, enhancing transparency and standardization [8][9] - The company is actively developing datasets and products for market makers and broker dealers to fuel liquidity [33] Q&A Session Summary Question: Strategy around private credit - Management is bullish on private credit, emphasizing the need for transparency tools for private credit funds to attract investors [24][25] Question: New products and marketing efforts - The strategy includes creating new products for the active asset management industry and expanding into other client segments [31][35] Question: AI opportunities and cost savings - AI is expected to dramatically increase margins by creating new products and reducing operational costs [63][64] Question: Sales momentum in asset management - The sales momentum is attributed to upselling additional content and services to existing clients, particularly in index [68] Question: Competitive moat against new entrants - MSCI's proprietary data and trusted brand create significant barriers to entry for competitors [72][75] Question: Performance of net new sales in EMEA - There was a decline in net new sales in EMEA, with management noting the need for further product innovation in that region [78]

Core Insights - Active ETFs are gaining prominence with an increasing number of launches contributing to the overall growth of the ETF market [1] - The T. Rowe Price U.S. Equity Research ETF (TSPA) has surpassed $2 billion in assets under management (AUM), reflecting its strong performance and investor interest [1] - TSPA has experienced a $618 million increase in AUM over the past six months, driven by both net inflows and price appreciation [1] Performance Metrics - TSPA has achieved a return of 14.2% year-to-date, outperforming its category average during the same period [1] - The fund has also outperformed its average over one- and three-year periods, indicating consistent performance [1] Investment Strategy - TSPA employs a research-based portfolio construction process aimed at providing similar economic exposure while seeking to outperform benchmark portfolios [1] - The fund charges a competitive fee of 34 basis points, which is attractive for investors [1] - T. Rowe Price's fundamental analysis capabilities are leveraged to identify key stocks that significantly contribute to overall market growth [1] Future Outlook - TSPA's focus on fundamental research allows it to adapt more flexibly compared to passive investment strategies, making it a compelling option for investors seeking active exposure [2] - The fund aims to outperform its benchmark by identifying firms that meet strict performance guidelines, which could enhance its appeal as the year concludes [2]

Core Insights - The trend towards alternative investment strategies, including derivatives and active ETFs, is gaining traction among investors seeking diversification and income generation [2][6][10] ETF Market Dynamics - ETFs have evolved over the past 30 years, providing access to various investment strategies that were previously unavailable to common investors [2][3] - There has been explosive growth in specific market segments, particularly in precious metals and cryptocurrencies, indicating a shift towards these alternatives becoming mainstream assets [4][6] Investor Behavior - Investors are increasingly using covered call strategies and other options-based approaches to manage risk and enhance income from existing holdings [2][3] - The current market environment, characterized by high yields and a weaker dollar, is prompting investors to seek uncorrelated assets to diversify their portfolios [8][12] Product Innovation - The ETF industry is witnessing rapid product innovation, with a significant increase in the launch of active ETFs and alternative-based products [10][12][20] - New managers are successfully entering the market, indicating a shift in the competitive landscape and a growing acceptance of diverse ETF offerings [12][14] Fee Structure and Performance - The trend towards active ETFs has led to a higher fee structure, reflecting the increased complexity and management effort required [15][16] - Investors are becoming more tolerant of higher fees for active management, especially when compared to traditional hedge fund fees [17][18] Due Diligence and Complexity - There is a growing demand for due diligence as investors navigate the complexities of new ETF products that utilize options, leverage, and derivatives [18][20] - Clients are increasingly interested in understanding how these new products fit into their overall portfolio strategy and risk-return profiles [19][20]

ETF Market Trends & Innovation - ETFs are providing access to strategies previously unavailable to common investors, such as covered call and option premium strategies [2] - Explosive growth is seen in specific market segments like precious metals (gold) and cryptocurrencies (Bitcoin) [4] - Alternative assets, including precious metals and crypto, are increasingly being adopted into mainstream investment portfolios to diversify and find uncorrelated assets [6] - Product innovation is driven by new demand, with a focus on active ETFs and derivative strategies [8][9][12] - The industry has shifted towards active ETFs, with new entrants differentiating themselves through innovative product offerings [10][11][12] Fees & Performance - While passive ETFs have seen fee compression, active ETFs can support higher fees due to the increased workload [14][15] - Higher fees for active management put pressure on managers to deliver performance [15][16] - The ETF fees should be compared to other industries like structured notes or hedge funds, where similar profiles or payoffs may come at a higher cost (e g, 2 and 20 in hedge fund wrapper) [17] - There's increased tolerance for fee elasticity, especially if end-users can access high-octane active management [17] Due Diligence & Risk - Due diligence conversations have increased due to the complexity of new ETF products using options, leverage, and swaps [18] - Clients are interested in how these new alternative-based ETF products function within their overall portfolio and their risk-return profile [18] - Investors are seeking to understand the potential systemic risks associated with the rapid pace of ETF innovation and launches [19][20]

Core Insights - Aberdeen Investments has expanded its active ETF offerings with two new mutual fund conversions, focusing on municipal bonds and international small-cap equities [1][2][3]. Group 1: abrdn Ultra Short Municipal Income Active ETF (AMUN) - AMUN aims to provide high after-tax income while preserving capital, with a net expense ratio of 25 basis points [1]. - The fund primarily invests in investment-grade fixed income securities and targets an average effective duration of about two years or less [1]. - AMUN is expected to have significant exposure to municipal securities from states such as Pennsylvania, Mississippi, New York, and Texas [1]. Group 2: abrdn International Small Cap Active ETF (ASCI) - ASCI seeks long-term growth by focusing on international small-cap stocks, with a net expense ratio of 0.70% [2]. - The fund's active management approach aims to mitigate risks typically associated with international small-cap investments [3]. - ASCI's portfolio team evaluates companies based on quality, growth, and momentum, targeting high-quality firms with strong performance potential [3]. Group 3: Market Position and Growth - The launch of these fund conversions coincides with Aberdeen's U.S. ETF franchise surpassing $18 billion in assets under management (AUM) for the first time, indicating the strength of its fund lineup [4]. - Jim O'Connor, CEO of Americas at Aberdeen, emphasized that this milestone reflects the firm's commitment to meeting evolving client needs and the trust investors place in their differentiated approach [4].

Core Insights - Active exchange-traded funds (ETFs) have gained significant popularity among investors, indicating a shift in market dynamics [1] Group 1 - The rise of active ETFs suggests they are no longer a niche product but have become mainstream in investment strategies [1] - Investors are increasingly recognizing the potential benefits of active management within the ETF structure [1] - The growth in active ETFs reflects broader trends in the investment landscape, where traditional passive strategies are being complemented by active approaches [1]

Core Insights - Investors have invested over $900 billion into U.S. exchange-traded funds (ETFs) in 2025, with a net inflow of $917 billion through September 29, indicating a potential record year if the trend continues [1][2][8] - The Securities and Exchange Commission (SEC) is expected to approve dual-share class structures, allowing mutual fund investors to convert to ETFs in a tax-efficient manner, which could further boost ETF inflows [3][6][7] Investment Trends - ETFs have gained popularity due to their tax advantages and efficiency compared to mutual funds, with significant inflows driven by bullish investors seeking diverse investment strategies [2][6] - The total assets in U.S. ETFs reached a record $12.19 trillion by the end of August 2025, up from $10.35 trillion at the end of the previous year [8] Notable Funds and Strategies - Vanguard's S&P 500 ETF (VOO) and BlackRock's iShares Core S&P 500 ETF (IVV) have seen nearly $140 billion in net inflows this year, averaging close to $1 billion per trading day [9] - BlackRock's iShares Bitcoin Trust ETF (IBIT) has emerged as the fastest-growing ETF, attracting nearly $24 billion in 2025, highlighting the demand for innovative investment products [12] Market Dynamics - The shift towards active ETFs has accelerated, with active funds now comprising close to 10% of the market's assets and capturing 37% of total inflows through July 2025 [17] - Financial advisers are increasingly moving away from traditional investment strategies, opting for alternative strategies that offer customization and risk management [16][18]