Advisory firm paths to side-by-side management and mutual fund performance✩

We examine whether the performance of mutual funds under side-by-side (SBS) management with hedge funds is affected by an adviser's path to SBS management. When advisers start with mutual funds and follow the MFtoSBS path, their mutual funds tend to perform similarly to funds without SBS advisers. By contrast, when advisers start with hedge funds and follow the HFtoSBS path, their mutual funds outperform funds without SBS advisers, though outper-formance is not observed when SBS management is conducted at the portfolio manager level. Additional analyses link our path results to managerial compensation, talent retention, and managerial experience.