Hedge fund managers have long clung to a doctrine of high fees in good years and bad, minting billionaires and riling investors along the way.

A pair of former Harvard University endowment executives have built the world's largest stock-focused hedge fund with the opposite approach. Robert Atchinson and Phillip Gross let investors in their $28 billion Adage Capital Management keep almost all of their trading gains-and promise refunds if the fund's performance falters.