Investing in the stocks of companies related to alcohol, tobacco and gambling is a good bet, according to a study from the Sauder School of Business at the University of British Columbia, Vancouver Sun reports.

These stocks deliver 2% to 4% higher returns than other equity securities, said Marcin Kacperczyk, an assistant professor at Sauder and co-author of the report.

“We were interested in the big question [whether] the fact that some people think something is morally unacceptable [affects] price,” he said.

In the study, “The Price of Sin: The Effects of Social Norms on Markets,” the academics found that sin stocks are underpriced and deliver a higher return over time.

Because many institutional investors avoid sin stocks or funds, there are fewer investors—and thus those who invest in such stocks take on higher risk, for which there is higher return, Kacperczyk said.

The researchers also found that in the 1950s, when tobacco was more acceptable, those stocks were not undervalued.

But those who run socially responsible investing funds maintain that they deliver competitive performance. “It’s quite well-established now in financial academic literature that SRI portfolios can perform as well as, or better, than non-SRI portfolios,” said Bob Walker, vice president of sustainability at Ethical Funds Co., which bills itself as Canada’s first socially responsible mutual funds.

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