The worst drought in the US midwest for 25 years made commodity-related hedge fund strategies winners in July, as agriculture commodity prices soared, new figures show.

With prices for goods such as soybeans, wheat, and corn pushing upwards, the Morningstar MSCI Systematic Trading Hedge Fund Index, which includes managed future strategies, jumped 4.3 per cent last month, taking its performance in 2012 to a 2.7 per cent gain.

In total, hedge funds went up by 1.9 per cent in July, taking the yearly gain to 3.7 per cent, according to the Morningstar MSCI Composite Hedge Fund Index, an asset-weighted composite of nearly 1,000 hedge funds.

"Most hedge funds successfully weathered a volatile July, beating the broad stock market indices,” said Terry Tian, alternative investments analyst at Morningstar, also highlighting strong performance by currency strategies.

The Morningstar MSCI Currencies Hedge Fund Index rose 3.9 per cent in July. The investment research firm said currency hedge funds benefited from their short positions on the euro. Despite a rebound towards the end of the month, the euro depreciated substantially against the US dollar throughout July, reaching a two-year low.

The firm also said that small capitalisation stocks underperformed large capitalisation stocks last month. The Morningstar MSCI Small Cap Hedge Fund Index was one of the few hedge fund indices that posted a decline in July, falling 0.8 per cent.

The researcher also posted asset flows for June, saying that single-manager hedge funds and funds of hedge funds in Morningstar's hedge fund database leaked $4.4 billion and $2.1 billion, respectively. The Europe long/short equity category experienced the heaviest redemptions among all single-manager categories, with outflows of $1.8 billion. The long/short debt and diversified arbitrage categories received inflows of $277 million and $105 million, respectively.