Innovator Debuts Quarterly ETFs as Goldman Sachs Takeover Looms

WHEATON, IL – January 02, 2026 – Innovator Capital Management, the firm that pioneered Defined Outcome ETFs™, today announced the launch of the industry’s first Dual Directional ETFs with quarterly outcome periods. The new funds arrive at a pivotal moment for the company, which is in the process of being acquired by investment banking giant Goldman Sachs.

The launch introduces two new products: the Innovator Equity Dual Directional 5 Buffer ETF™ — Quarterly (DDSQ), which references the SPDR S&P 500 ETF Trust (SPY), and the Innovator Growth-100 Dual Directional 5 Buffer ETF™ — Quarterly (DDNQ), the first-ever Dual Directional ETF linked to the popular Invesco QQQ Trust (QQQ). These ETFs are designed to offer investors the potential for positive returns in both rising and moderately declining equity markets, but over shorter, three-month cycles.

This strategic product expansion comes just weeks after Goldman Sachs announced on December 1, 2025, its definitive agreement to acquire Innovator. The deal, expected to close in the second quarter of 2026, is seen as a major validation of the defined outcome investment category that Innovator has championed.

A New Framework for Tactical Investing

At the core of these new ETFs is a sophisticated options-based strategy designed to provide what Innovator calls "adaptive, outcome-based exposure." Unlike traditional ETFs that simply track an index, Dual Directional ETFs aim to generate positive returns when the underlying reference asset (like SPY or QQQ) goes up, and when it goes down, up to a certain point.

The key innovation is the quarterly reset. While Innovator already offers similar products with one-year outcome periods, this new suite resets its defined outcomes every three months. This shorter duration is intended to provide investors with greater flexibility and mitigate the timing risk associated with longer-term structured products.

“Investors are looking for ways to manage risk dynamically without sacrificing liquidity or transparency,” said Graham Day, Chief Investment Officer at Innovator, in a statement. “With our new quarterly Dual Directional ETFs, advisors and investors have new model-friendly tools to pursue positive returns across market regimes while maintaining disciplined exposure aligned to clearly defined outcomes.”

The mechanics rely on a complex portfolio of Flexible Exchange® (FLEX) options. These exchange-traded, customizable options contracts allow the fund to create a unique risk-reward profile:

• Upside Participation: The funds offer a 1-to-1 return on the upside of the reference index, up to a "Cap." For the initial period, the cap is 3.34% for DDSQ and 4.69% for DDNQ.
• Inverse Performance: If the index falls, the ETFs are designed to provide a positive return equal to the absolute value of the index's loss, but only up to a 5% decline. For example, if the index falls by 3%, the ETF aims to gain 3%.
• Downside Buffer: If the index loss exceeds that 5% threshold, the fund's inverse performance feature ceases, and a separate buffer seeks to absorb the next 5% of losses.

This structure is designed for investors who want to stay invested but are wary of short-term volatility. The quarterly nature allows for more frequent opportunities to adjust exposure or enter the strategy with a fresh set of caps and buffers that reflect current market conditions.

Responding to Surging Demand for Risk Management

Innovator’s latest launch is a direct response to a powerful trend in the investment world: a growing appetite for products that offer built-in risk management. Since 2020, the defined outcome ETF category has experienced a compound annual growth rate of 66%, as investors seek alternatives to traditional stock and bond allocations, especially in volatile or uncertain markets.

The appeal of dual directional strategies, in particular, is their potential to generate returns even when markets are not trending upward. This makes them an attractive tool for portfolio diversification and tactical positioning. By packaging these strategies in a transparent, liquid, and tax-efficient ETF wrapper, Innovator has made them accessible to a much broader audience than the structured notes and insurance products that historically offered similar payoffs but with higher fees, credit risk, and illiquidity.

While other firms like First Trust and AllianzIM have entered the defined outcome arena, Innovator has maintained its leadership position since launching the world’s first Buffer ETF™ in 2018. This launch of the first-ever quarterly dual directional products further solidifies its reputation as a primary innovator in the space.

The Goldman Sachs Effect

The backdrop to this launch is the pending acquisition by Goldman Sachs Asset Management. The deal will bring Innovator’s specialized product lineup, which includes over 150 offerings and managed approximately $29 billion in assets as of late 2025, under the umbrella of one of the world's largest asset managers.

For Goldman Sachs, the acquisition provides an immediate and significant foothold in the fast-growing defined outcome market. For Innovator, it promises access to Goldman's vast distribution network and resources, potentially accelerating the adoption of its strategies among wealth managers, institutions, and retail investors. The continuation of product innovation, even as the acquisition is pending, signals a "business as usual" approach focused on maintaining market leadership. The deal itself is a powerful endorsement of the entire defined outcome category, suggesting these once-niche products are moving firmly into the mainstream.

Understanding the Fine Print: Risks and Suitability

Despite their innovative design, these complex products are not without significant risks, and they are not suitable for all investors. The "defined outcomes" are not guaranteed and come with important caveats.

The most significant is the capped upside. Investors forgo any gains beyond the predetermined cap for each outcome period. Additionally, the outcomes are only realized for those who hold the ETF shares from the first day of the outcome period to the last. Investors who buy in the middle of a period may experience very different returns and may have limited upside potential while still being exposed to downside risk.

Furthermore, the inverse performance feature has a strict limit. If the underlying index drops more than the 5% threshold, this feature provides no further benefit. While a separate buffer then kicks in, losses can still occur. The funds also rely on FLEX options, which can be less liquid than standard options, and carry a remote but present counterparty risk associated with the Options Clearing Corporation.

Financial advisors suggest these ETFs are best used as tactical tools by investors who fully understand their mechanics. As with any complex financial product, prospective investors are strongly encouraged to read the fund’s prospectus carefully to understand its objectives, strategies, and the full spectrum of potential risks before committing capital.