Aug 12 (Reuters) - Goldman Sachs ( GS ) will acquire

exchange-traded funds provider Neos Investments for as much as

$2.25 billion, as the investment bank looks to bolster its

presence in active asset management.

Neos manages $30 billion in assets across 19 ETFs that cover

a suite of index products, while using options to generate

additional income and cap downside risk.

Demand for such products has surged of late, as institutions

look to hedge portfolios with investments that help cushion

drawdown risk and provide recurring income in a volatile market

environment.

Neos has returned about 19% over a one-year period through

June in its flagship S&P 500 high-income ETF, while total

returns in the fund since inception are close to 15%, according

to the firm's website.

"As investor demand for active ETFs grows, Neos' disciplined

investment approach is highly complementary to our capabilities

across buffer, managed outcome and income strategies," Goldman

CEO David Solomon said in a statement.

Goldman has pursued acquisitions in the actively managed ETF

space to diversify into asset management and capitalize on the

growing demand.

The Wall Street giant acquired Innovator Capital, which also

employs an options-based ETF, earlier this year.

Investment banks across Wall Street are also leaning on

their asset management businesses for steadier revenue to

counter the vagaries of hard-to-predict investment banking and

trading growth.

Goldman reported net revenue of $4.6 billion from its asset

and wealth management segment in the second quarter, a 20% jump

from the same period a year earlier.

Its purchase of Neos, expected to close in the first quarter

of 2027, will propel its active ETFs to $80 billion.

Post-acquisition, Neos co-founders Troy Cates and Garrett

Paolella will join the bank as partners.