MSCI may have been more instrumental in changing investor behavior toward Israel than an eight-year-old divestment campaign by some Harvard and MIT academics. The index provider's decision to move the country to a developed nations index prompted Harvard University, T. Rowe Price and Eaton Vance to sell a combined $210 million in Israeli stocks from their emerging markets investments last quarter, according to Bloomberg estimates. Funds focusing on mature economies have been slow to buy the shares because Israel accounts for just 0.4 percent of the developed markets index, compared with about 3 percent of MSCI's emerging markets measure. 'Israeli stocks might be in no-man's land for a while,' said John Derrick, the director of research at San Antonio-based U.S. Global Investors. 'It's small enough in the developed market index to avoid altogether,' said Derrick, whose firm's Global Emerging Markets Fund sold 9,346 shares of Israel Chemical during the second quarter, according to data compiled by Bloomberg. The sales have hurt returns of Israeli stocks, with the Tel Aviv 25 Index trailing the MSCI Emerging Markets Index and the MSCI EAFE index of developed non-U.S. markets since it was upgraded on May 27. Derrick said the country may attract new funds after a transition period because it has stronger economic growth than other developed markets. The MSCI upgrade, a plan made public more than a year ago, reflects diminished concern by investors over geopolitical risks when buying Israeli stocks, according to Frank Nielsen, an executive director for the New York-based company. Israel had already satisfied developed market criteria related to economic sustainability, market size and liquidity, and market accessibility. None of the asset managers said they sold the shares for political reasons. In 2002, professors and students from Harvard and the neighboring Massachusetts Institute of Technology called on the schools to divest from Israel and from U.S. companies that sell arms to the country, to protest the occupation of Palestinian territory by Israel. The petition, organized by academics including Nancy Kanwisher, a brain and cognitive sciences professor at MIT, was signed by 132 faculty members from both institutions, including Noam Chomsky, a linguistics and philosophy professor at MIT. Chomsky, in an e-mail, said while he supported the 'general thrust' of the petition, he criticized it for excluding 'countries with far worse criminal records,' including the U.S. The Tel Aviv 25 index returned 2.5 percent in the year after the petition, compared with a 15 percent decline by the MSCI Emerging Markets Index. In the eight years since the petition was announced and before Israel's promotion, the gauge returned an annual average of 14 percent, excluding dividends, beating the 13 percent average of the MSCI Emerging Markets Index. 