Hedge fund is basically an investment instrument that cater to high net worth individual(HNWI). In US, there are certain jurisdiction which require the investor to have a certain amount of net worth (wealth) to qualify to invest in hedge fund. Another interesting characteristic of hedge fund may be its fee structure, most hedge fund do a 2/20 structure that is the firm will charge 2% of its asset under management every year regardless of result, a rather similar feature with the management fee charge by your normal mutual fund. Then, the hedge fund also charge performance fees such as 20% of the profits above a hurdle rate, mostly set at 6% p.a.. There are some who do not follow a 2/20 structure, people like Buffett when he is running his hedge fund-like partnership have a 25% performance fee structure without the intial management fees. So, you only pay him when he make money for you. This structure is being replicated by a lot of others value-based hedge fund manager like Prabai, Burry and Guy Spier. Some other funds meanwhile charges a 3/30 structure. Renaissance technologies, the quant fund charges a whooping 40% performance fees.

The initial hedge fund do use a long/short strategy, i.e. the long and short at the same time. The reason is to achieve a decent return over any market conditions, be it a bull or a bear market. When bull market, the long will make money while in the bear market the short will make money. However, as time gone by, there are quite a few long-only fund. Prabai for instance is a long only hedge fund. So, now hedge fund do not necessary need to engage in short selling. It is now define more as an instrument for HNWI.

In Malaysia, although they do not call it a hedge fund, some of our funds looks like hedge fund. The Singapore based fund by ICapital is structure such a way that it looks like a hedge fund because it engage in a 2/20 structure. I think the initial investment is rather big too, meaning, only rich people can afford to invest. Another one is the one by Teoh Kok Lin, its fee structure and initial investment also make it looks a bit like a hedge fund.

BTW,one of the top hedge fund manager in Asia is actually a Malaysian. He is Cheah Cheng Hye, very well respected within the industry and he is running one of the biggest hedge fund in Asia- Value Partners- out of Hong Kong.