Richard Beales of Breakingviews.com wrote in the New York Times that the sector has seen the assets under its management almost half from $2 trillion at the start of 2008.
Many funds have already collapsed - and those that remain face fundamental changes, he added.
The "new watchword" of the investment pools will be liquidity and in order to prevent damaging client withdrawals, funds that focus on illiquid assets will have to lock in investors for longer, he remarked.
Meanwhile, it could be the "Last Post" for longstanding fee arrangements such as the model of charging two per cent on assets and 20 per cent on investment gains, as competition for investors' money will drive down charges.
Hedge funds could also face a regulatory crackdown and substantial consolidation after a turbulent 12 months, Mr Beales added.
According to data from Hedge Fund Research, a record-high 344 hedge funds closed in the third quarter of 2008.