US product provider Incapital has entered into a distribution partnership with Alaia Capital, an independent asset management company specialising on outcome-driven structured solutions through which Incapital will offer Alaia Capital's market-linked Unit Investment Trusts (UITs), marketed under the m+ funds brand, to financial advisors through its network of broker/dealers and banks.

The Alaia/Incapital distribution partnership was formed on a mutual understanding of, and appreciation for, what each firm can deliver, according to a joint statement. "Alaia’s principals have extensive experience and expertise developing structured product offerings like the new m+ funds; while Incapital is the industry’s leading independent distributor of market-linked products," said the statement. "The combination of Alaia’s product construction expertise and Incapital’s professional distribution capabilities – focused on offering risk management solutions – is a very strong combination.

M+ funds provide outcome-driven exposure to exchange-traded funds (ETFs) over a fixed period of time. As UITs, m+ funds provide daily net asset value pricing and transparent liquidity. M+ funds are marketed as a complement or alternative to structured notes as they eliminate bank or corporate credit risk and can also be deployed in both fee-based and brokerage accounts. 'M+ funds are designed to offer the risk management flexibility of market-linked strategies, but in a familiar '40 Act format that is scalable to a broad set of clients,' stated Oscar Loynaz (pictured), co-founder of Alaia Capital and former head of Americas structuring and trading for the global multi asset group at Citi.

Under the terms of the agreement, Incapital will distribute m+ funds, which are classified into three categories, each designed to solve different risk/reward objective, including m+ Growth, which seeks to outperform ETFs in positive return environments; m+ Balanced, which seeks to outperform ETFs in a modest positive or negative return environment; and m+ Protection, which seeks to deliver exposure to an ETF's positive returns and insulate against its losses.

Alaia Capital's entered US UITs earlier this year with the launch of its Market-Linked Trust platform. The first UIT launched by the company tracks the performance of the SPDR S&P 500 ETF with a maturity of two years and a two times leverage factor on the ETF up to a maximum return of 19%, while protecting against the first 10% decrease.

The new platform added to recent UIT developments, including CBOE Vest's first Structured Unit Investment Trust developed in partnership with Elkhorn Investments.

Incapital's structured notes activity has declined over the last two years, with a number of structured products executives joining other companies, including Glenn Lotenberg, a former structured products manager who joined Advisors Asset Management (AAM) as a managing director, to be reunited with John Radtke, who joined AAM as executive vice-president of capital markets and capital markets sales in 2015.

UITs are getting increasing attention in the US  after a number of market players moved to address the new Department of Labor fiduciary rules and are looking into delivering fiduciary-based structured solutions via fund-based products on the basis that they provide higher liquidity and transparency along with mitigating a number of issues seen in the structured notes market such as credit risk.

Related stories:
Former Citi executives launch structured investment platform in US

UIT wrapper can address some of the limitations around structured notes, Vest

CBOE Vest enters US mutual fund segment with downside protected play, readies first SUIT