What is one downside to indirect commodity investing?

One downside to indirect commodity investing is the typically higher fees associated with these investments compared to direct investments. When investing indirectly, such as through mutual funds, exchange-traded funds (ETFs), or other vehicles, investors often incur management fees, administrative costs, and potentially performance fees. These expenses can erode returns over time and make indirect investment less efficient than directly holding physical commodities or futures contracts.

In contrast, indirect investments may provide exposure to commodity prices and allow for diversification without the complexities of direct ownership, but they come with the trade-off of added costs. While some might argue that these vehicles offer effective exposure to commodity price changes, any advantages must be weighed against the increased fees involved. Additionally, indirect investments do not grant control over production, nor do they eliminate the risks associated with commodities; thus, those qualities do not pertain to the concerns of indirect investing.