Commodity prices will not see the heights of the pre-crisis years again, according to Legg Mason's hedge fund arm The Permal Group.

"Commodities were a bull market phenomenon, and the new normal is going to be a lower range of pricing," Permal investment strategist Tim Schuler said yesterday at the Legg Mason Investment Symposium in Sydney.

But not all commodities will fall in price - Schuler believes the gold price will remain high.

"Gold does not behave like other commodities in the market. Gold is a store of value - it is a Boeing in a sea of Fiats," he said.

Permal is a US$20 billion multi-manager of hedge funds and has been around for more than 30 years.

Although the hedge fund industry experienced a significant shake-up during the global financial crisis, it is not likely to disappear because it operates in largely the same space as regular funds.

"The problem we see with people trying to categorise hedge funds as alternatives is the fact that they don't trade in some other world where trade is different from anybody else," Schuler said.

"They should be looked at as a different way to play the same asset classes that you all invest in," he said.

Hedge funds have become more relevant as a rebalancing between developed and emerging markets will see continued volatility, while markets are likely to move sideways over the coming years.

"It is critical that you use all your tools," Schuler said.