Is the hedge fund pie being eaten by more and more of the quantitative funds?

I would say no.

There are some trading strategies that cannot be automated — I should know — my team has tried to automate a lot of different strategies. Quants “rely” on a lot of data and “data source providers” to make trading decisions, which isn’t always available—bad data can lead to a disaster. There are advantages and disadvantages to both systematic & discretionary trading.

I would say there is room in the markets for BOTH systematic and discretionary trading methods.