By Julia La Roche From Business Insider

Adage Capital is located in the John Hancock Tower in Boston.

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A $28 billion Boston-based hedge fund could be in the unusual position of having to hand out refunds to its investors at the end of the year.

Adage Capital Management, the biggest stock-focused hedge fund in the world, promises refunds to investors if the fund delivers subpar returns, according to The Wall Street Journal’s Rob Copeland.

Generally speaking, hedge fund managers are paid through a compensation structure commonly known as the “2 and 20,” which means investors are charged 2% of total assets under management and 20% of any profits.

Adage in contrast charges only 0.5% for assets under management, and it takes 20% of profits if it beat the S&P 500, a common benchmark used to compare performance for stock-focused funds.

If Adage doesn’t beat the S&P, the investors get a refund. The hedge fund will pay back up to half of the fees it collected from the previous year, the report said.

The fund’s latest 13F filing shows lots of large bets on Apple, Microsoft, GE, Puma Biotechnology, and hundreds of other stocks. Adage made a killing last summer on its big bet on Puma.

The fund is down 3.53% this year through the end of August, according to The Journal, while the benchmark has dropped 2.88%.

That means it could have to refund investors at the end of the year.

To read the full The Wall Street Journal article click here: http://www.wsj.com/articles/giant-hedge-funds-radical-idea-performance-guaranteed-or-your-money-back-1441858527

IMAGE: John Hancock Tower, Boston Reuters/ Brian Snyder

For more on this story go to: http://www.businessinsider.com/adage-capital-fee-structure-2015-9