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What are commodities?

Commodities are raw materials or industrial metals that can make something else. Examples include oil, corn, and steel.

Commodities can offer portfolio diversification because of their low correlation with stocks and bonds. However, these investments have mixed results in creating long-term returns. They also tend to be volatile investments.

Investors interested in commodities can own these assets directly, own shares in a company that produces raw materials, or buy an exchange-traded fund (ETF) that holds the commodities directly.