To hedge a bet is to protect against loss by betting a counterbalancing amount against the original bet. Similarly, a hedge in the financial world is a transaction that reduces the risk of an investment. So why are high-risk partnerships that use speculative techniques called hedge funds?Hedge Funds are usually designed as partnerships with the general partner typically being the hedge fund’s manager. (Hedco.net, 2006) The general partner usually invests a large part of his wealth and money into the hedge funds. Hedge funds are different from mutual funds with respect to the type of investors and also with regards to the regulations generally imposed on them. The objective of this dissertation is to analyze the hedge fund scenario in Russia and compare the same with scenarios in different regions of the world. This area is worth study because the hedge fund scenario in Russia has completely changed ever since the 1998 LTCM crisis, which led to absolute mayhem in the stock markets in different parts of the world. The change in the policies of the stock market since then brought about significant changes to the stock markets and other related transactions and the western investors realized that Asian hedge funds were potential investment centres. Since then, a lot of western investors thronged the Asian markets, which also include the Russian markets, and with literally no regulations, they brought about a lot of changes to the local stock market. Many economists feel that the hedge funds have not lived up to the hype they were first surrounded by and are quite apprehensive about their growth. The growing demand for regulations over the hedge funds also can hamper their growth according to a few economists. A recent study by Roger Ibbotson and Peng Chan for Morningstar suggests that between 1994 and April this year the average hedge fund has returned a mere 9 per cent a year after fees. More than a thousand hedge funds all over the world are said to have closed down either because their managers have made a lot of money and do not feel to work more or they have underperformed in the industry.