Simco 500 Index Fund for Share Price

[waltdisney]

Hey there!

Since share prices are stuck in limbo, I’ll attempt to create a viable idea for this by creating an index fund.

SIMCO 500 (modeled after the S&P 500) will be an index based on the top 500 companies of Simco. The fund will have a fund management fee of 0.40% each (whatever time period) plus a 20% performance fee (20% of the income as the fund manager’s commission.

How do we setup this fund? Players can buy and sell their index shares on the exchange at a specific index price.

How do we determine index price?
So let’s say that the Simco500 average share price is $400 and since we somehow always have 1,000,000 shares per company then that is $400,000,000 market capitalization per company X 500 companies = $200,000,000,000 or $200 Billion. The Index Fund Price will be $200,00,000,000/ $10,000,000,000 = $20.00 INDEX FUND PRICE BASE for NORMAL ECONOMY.

This is the base price because it will obviously fluctuate based on the top 500. It can fluctuate due to players going inactive/deleted and replaced in the rankings by players will lower share prices. However, this is generally on an uptrend. The base share price will decrease by 1-3% in recession and increase by 1-3% in boom so economy state will be very important for the index fund.

Please note that if there is a recession then recession, the base index price will decrease 1-3% each time. This means successive booms or recessions will heavily affect the index fund.

For example:
[Normal] - 0%
[Boom 1] +1-3%
[Boom 2] +1-3% from last boom base index price
[Normal] -1-3% from Boom 2
[Normal 2] No change

This means that after 2 booms, the index fund base price didn’t actually go to the normal base price but it is higher by 1-3% from normal. It would take a recession to bring it back to normal base index price. Another normal doesn’t change anything.


Due to the risk, players can only invest up to 5% of their company value into the index fund. Let’s give an example how this index fund thing would work:

My Company Value is $500,000,000.
I can only invest up to $25,000,000 into the index fund.
Index fund price is $20.00; I can buy 1,250,000 index fund shares.
I get charged (example of 0.4% per day) or $100,000 fee daily.
Sell in exchange at $25.00/share = $6,250,000 income.
20% performance fee = $1,250,000

So if I kept the index fund for 14 days = $100,000/day X 14 days.

Net income = $6,250,000 - $1,250,000 (performance fee) - $1,400,000 management fee = $3,600,000 net income from the trade.

*Note = You can play around with the management fee. You can play around with the performance fee. You can make investments in index fund part of the Accounting Fees (tax). You can also play around with how many % of your CV can be invested into the index fund.


Tell me your thoughts? Thanks

[Walt Disney Conglomerate Inc.]

[patrik]

If I understand correctly, the index price is not supply/demand driven, but instead algo/rules derived. As mentioned, a generally upward trend is expected.

Seems like a money generator to me, with zero risk, and no effort, just invest and sit idle. Dis-proportionally benefiting the long-term players. There are a few fluctuations, yes, but this will only go up in long run.

As described it would also de-facto remove the accounting fees.

I can't see how this would be a good addition to the game. Not a big fan.

[waltdisney]

It is not without risk as the investor must pay daily management fee (you can increase it) so the longer they hold it, the more fees is incurred.

Accounting fees will add whatever you invest here just like how it adds when you invest in bonds so you pay daily since you may exceed tax brackets.

You can also increase the performance fee from 20% to possibly 40% of income.

Also, to minimize just earning from it while sitting pretty, you can decrease % of Company Value limit to invest from 5% to 2% with maximum of $10,000,000.

Supply and demand will be based on selling/buying on the exchange as well but since it’s an index fund, people will just know the inherent value of the index fund share but can trade it higher or lower.

Index fund shares will be traded in the exchange only and subject to the usual 3% listing fee.

[waltdisney]

Just to clarify your concern, the index fund price that goes up and down at a set amount is the inherent value of the index fund shares which will be used for rollover data to calculate CV.

The actual index fund shares will be traded between players in the exchange so the players will determine its trading value by supply and demand. Therefore, players need to trade these shares to actually get their cash back or forever pay management fee.