An Approach to Pursuing Consistent Income
Third Lake Partners Alternative Yield Strategy Fund ("PAYS" or the "Fund") offers enhanced income potential while actively managing underlying equity risk.1
$122M
Cumulative coupon
income
$2.3B+
Traded over the last
five years
98.9%
Of targeted coupons
collected
0
Principal barriers
breached
Built on more than $2.3 billion of notional traded over more than five years, PAYS provides access to a diversified portfolio of custom-negotiated equity-linked yield notes managed within a single registered fund. The strategy seeks to generate consistent income while utilizing contingent downside barriers designed to help mitigate market declines.
Equities are expensive and when valuations are high, yield becomes the primary return driver.
The S&P 500 is currently trading at a forward price-to-earnings ratio of 19x. In environments like this, yield drives outperformance. Historically, this heightened valuation level has led to 10-year annualized returns between 6% and 7%. Asymmetric, defined-downside income solutions can offer a more balanced return.
The Fund is able to diversify across major global equity indices and source pricing through competitive auctions, reducing the fee burden typical of brokerage-based structured notes and providing enhanced liquidity relative to owning individual structured notes.
25% quarterly Repurchase Offers
Distributions are made quarterly from a cash flow stream designed to be continuous and repeatable.
Downside-risk mitigation embedded in each position and across the portfolio; exposure to major global equity indices, not single names; issuer risk diversified across investment-grade global banks.
Laddered, systematic investment with an active overlay to monitor risk, rebalance exposures, and optimize new issuance.
Across indices, initial strike levels, issuers, maturities, and risk mitigation (e.g., barrier) levels; no reliance on any single market, issuer, or payoff path.2
Linked to highly liquid public markets, with clear reporting and continuous monitoring of risk, income, and exposures.
A lead PM with 20+ years of structured derivatives experience, longstanding issuer relationships, and direct competitive-auction purchases that remove brokerage fees and improve pricing & execution.
The Fund is suitable only for investors who can bear the risks associated with the limited liquidity of the Fund and should be viewed as a long-term investment. The Fund intends to provide limited liquidity through quarterly offers to repurchase a limited amount of the Fund’s shares (at least 5% of shares outstanding); however, there is no guarantee that an investor will be able to sell all the shares that the investor desires to sell in the repurchase offer.
Each note is a senior unsecured debt obligation of an investment grade issuer whose payout is tied to the performance of broad equity market indices, not a single stock.
The Fund has received a coupon payment every ~3 trading days.3
A systematic, laddered approach
Laddered exposure to callable yield-enhancement notes can allow for diversified call-observation periods.
During falling markets, the Fund can invest in new notes with coupons set at higher levels, improving recovery potential.
Strategically diversified across index baskets, tenors, risk mitigation (e.g., barrier) levels, issuer credits, and initial strikes.2
Facilitates the ability for investors to transact directly with more than 20 issuers, not brokers.
Strategy Volatility Monitoring
Structured Note Issuer Credit Monitoring
Security Greeks Sensitivity Analysis
Index Basket Volatility And Correlation Analysis
Broad issuer and index diversificatioN.2
Enhanced yield. Shorter duration.1
For those seeking enhanced yield and shorter maturities versus the traditional income options.
Duration: ~6.5-month average life.5
Includes corporate bonds, treasury notes, commercial paper and money market investments
Senior to equity in the case of insolvency, and sometimes collateral-backed to improve recovery
Return typically comes from yield, which is a function of default risk, maturity and prevailing market interest rates
Potentially enhanced yield than other debt securities with similar maturities1
Risk mitigation that may keep principal and yield intact through moderate market declines and volatility
Opportunity to achieve above-market yields in an environment where equity is priced at historically high levels
Includes single equities, stocks, equity mutual funds and ETFs, options and ownership stakes in private companies
Typically, no protection on downside and higher volatility for liquid assets than fixed income
Return can include a dividend or fixed-income component, but largely is driven by price appreciation
The Fund has a 5-year track record implementing a strategy that is designed to be adaptive and perform well through different economic and market environments.
PAYS Historical Performance
0
(0%)
Principal Barriers Breached
553
(98.9%)
Coupon Payments Collected
6
(1.1%)
Coupon Payments MisseD6
0
(0%)
Principal Barriers
Breached
529
(98.9%)
Coupon Payments
Collected
6
(1.1%)
Coupon Payments
MisseD2
As of September 2026, PAYS has generated ~$122M of coupon income since inception.
Led by a portfolio manager with 20+ years of equity-derivatives and structured-notes experience, supported by Third Lake Partners' investment, trading and risk infrastructure.
Robert Forsythe
Founder & Senior Managing Partner, CPA, CGMA
Nathan Sheldon
Partner & Head of Structured Products, CFA
Case Fell
Partner & Head of Asset Management Solutions, CFA, CAIA, CIPM
Joshua Apfel
Managing Director of Product & Distribution Strategy
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