For clarity - regulations are enacted by the executive branch, consistent with stautues enacted by Congress. For example, 17 CFR § 240.10b5-1, aka Rule 10b5(1), concerning Trading “on the basis of” material nonpublic information in insider trading cases, was promulgated by the SEC in accordance with Section 10(b) of the Securities and Exchange Act of 1934.
In fact, the SEC chair is currently considering beefing up this rule. Legislation not required.
https://www.sidley.com/en/insights/newsupdates/2021/06/sec-enhances-focus-on-rule-10b5-1-plans-what-should-companies-do-now
Since 2012 when the STOCK Act was passed, Congress has been subject to more or less the same rules as everyone else. One can make the case that Congress should be subject to more stringent laws, and for that, legislation would be required.

Let's try backing up and going through this again, slowly.
I wondered how the differences in methodologies might effect the composition of the fund as a result of the change.
The methodologies here are of two indexes. Ideally then one would compare the indexes themselves. Unfortunately, since one of those indexes (Nasdaq US Dividend Achievers Select Index) is proprietary, it's impossible to get data directly about the index. (This illustrates why one of the promoted advantages of index funds - transparency via the underling index - is sometimes less than advertised.) So BaluBalu used VDADX as a proxy for the Nasdaq index.
To its credit, Vanguard is moving this fund from an opaque index to a transparent one.
People generally look at funds in terms of average (mean) market cap. When they ask whether a fund is large-, mid-, or small-cap, they are looking at where the fund's average market cap falls. When they do screening on fund market caps, they are screening on average market cap. And so on.
There are two points here. One is that a discussion of average (mean) market caps is on point because the question is about how these two indexes compare. Average market cap is a part of that comparison. The other is that the use of median rather than average (mean) market cap as a basis of comparison seems a little odd given the greater familiarity with mean market cap. For both these reasons, I will continue to discuss mean market cap as well as median.
Vanguard reports the mean market cap of VDADX (as of June 30) to be $262.8B (vs. $262.6B for the underlying index). In comparison, S&P reports the mean market cap of the replacement index to be $53.3B. As this 5:1 ratio is huge, albeit not nearly as large as the 13:1 ratio of median market caps reported, it raises the same question: is this large difference for real?
That question has the same answer for either average: The discrepancy is due to the fact that S&P calculates unweighted averages (both mean and median), while Vanguard calculates weighted averages.
How would one know this? One way would be simply as a result of due diligence - reading the fund's statutory prospectus, hardly something obscure or difficult to find. In it, one sees:

Median Market Capitalization. ...the midpoint of market capitalization (market price x shares outstanding) of a fund’s stocks, weighted by the proportion of the fund’s assets invested in each stock. Stocks representing half of the fund’s assets have market capitalizations above the median, and the rest are below it.

As far as knowing that the average (mean) market cap figures given by funds are weighted, I take that as a given. As noted above, most people look at market cap numbers (or market cap ranges/style boxes) when carefully researching funds. So we can assume that most people understand what these figures represent.
Average market caps are a very familiar quantity. Forget about Vanguard. Even Blackrock, another large purveyor of index funds, posts average market cap figures without seeing the need to add a footnote that the averages are weighted. I understand people's zeal in ragging exclusively on Vanguard, but in this case the narrow focus is misplaced.
Because VDADX is a market-cap weighted fund, the proportion of the fund's assets invested in each stock is proportional to the market cap of that stock. So weighting each holding by the dollars invested is tantamount to weighting each holding by its market cap.
A trivial hypothetical can illustrate this: Assume three companies, A (market cap $2B), B (market cap $3B), and C (market cap $4B), and a market cap weighted fund holding these three companies. So their weights would be in the ratio 2:3:4.
We would compute the weighted mean as:
2/9 x $2B (A) + 3/9 x $3B (B) + 4/9 x $4B (C)
Notice that aside from scaling (dividing by 9), the summands are the squares of the market caps: 2², 3² and 4².
Again appealing to the fact that "everyone" understands and works with weighted average market caps, I'll skip illustrating why weighting presents a better picture than relying on unweighted averages.
I hope I've covered all the comments, from whataboutism to why market cap weighting is relevant to the squaring of market caps in computing averages. As well as the stuff in between.

The underperformance unfortunately goes beyond 2015-16. Prior to this year in which the fund is winning, Sequoia has underperformed its Morningstar Large-Cap Growth fund category peers for seven straight calendar years. Admittedly, one could argue it is miscategorized as large-growth. I wonder how it would hold up versus say the large-blend category. But 2021 so far has been a good year for this fund.

Sven - While officers in companies with publicly traded stock can hold shares of their stocks, their trading in that stock is restricted, and they need to (in theory at least) restrict their trading to periods in which material public information has been disclosed.
If they don't, and it can be shown that they traded on "insider" information, the SEC can force them to "give back" their trading gains, and can also impose penalties, etc.
Wiki link, with references, below. Check out 'Notes' at bottom of page for numerous references to various incidents.
Previously, Fed restrictions on Fed President stock trading had focused upon their trading in the stocks of regulated institutions, i.e., big banks, under the now quaint notion that bank stocks were the primary asset class influenced by the Fed's (regulatory) activities.
The Fed's COVID asset purchases - and Kaplan and Rosengren's trading activity - demonstrate the folly of the original trading restrictions.
https://en.wikipedia.org/wiki/Insider_trading
FWIW, when Alan Greenspan was Fed Chairman (and already wealthy), his personal investments were primarily short term treasury bills, to avoid any apparent conflict of interest. Link to 1998 WSJ article below.
Greenspan Says His Investments Are in Short-Term Treasury Bills
By Jacob M. Schlesinger WSJ | Aug. 18, 1998
https://www.wsj.com/articles/SB903395355927059500

Yes, sometimes managers make comments outside SEC disclosures about their direct economic participation. I was asking folks to share if they are aware of such information.
I read this AM the M* analyst report for this fund. M* gives a Neutral rating, only one level above Negative, but gushes over with "[Managers] invest heavily in the strategy alongside fundholders." Who knows what the "heavily" means but hopefully not just the over $1M disclosed in the SAI (SEC filing).
Evidently, the current four managers have been with this fund for at least 10 years, which includes 2015-16.
The above is just an FYI.

The SEC requires disclosure of portfolio managers' ownership in the following ranges: none, $1–$10,000, $10,001–$50,000, $50,001–$100,000, $100,001–$500,000, $500,001–$1 million, and over $1 million.
Unless managers with more than $1 million invested in funds publicly reveal a specific amount or threshold, it may be difficult to ascertain this information.

That makes sense, David.
Since there seems to be keen interest in this fund on this board, do we know what is the max any current manager has invested in the fund? M* says more than a million dollars, which does not impress me as I think that would be less than 1 yr of compensation for each of the managers. M* reports from SAI. I would like to see 3-5 yrs of annual compensation before putting any positive weight on managers’ economic participation. I get that having too much of managers’ wealth could be a detriment too but 3-5 years of annual comp is not too much, given a lot investors put 5-10% of their wealth in a fund.
P.S.: I have never invested in this fund but am open to investing in it, not withstanding its misadventures in 2015-16.

Yahoo reports FXAIX's median market cap as $186.1B vs. the $32.1B figure reported by S&P for the underlying S&P 500 index. Given Yahoo's "non-standard" use of median (which it doesn't define), it makes you wonder what other terms Yahoo is fooling around with.
S&P uses what you call the "standard" definition of mean. But it seems to be the only one calculating the S&P 500 average market cap this way. While it reports an average of $79.9B, the S&P 500 index funds reporting give their average market cap as over $500B.
It makes one wonder what other terms the whole fund industry (not just Vanguard) is fooling around with. Or in the alternative, whether S&P is the one out of step in how it calculates a portfolio's average market cap. Because it seems that the standard way of calculating a portfolio's aggregate statistics is to weight its holdings.
A few sample figures for S&P 500 index fund average market caps:
Fidelity FXAIX - $539.7B (June)
Vanguard VFIAX - $543.1B (June)
Franklin SBSPX - $545.9B (July)
iShares WFSPX $608.4B (August)
Schwab goes these funds one better, by giving two very different figures:
$518.7B in its April 30, 2021 semi annual report, where it labels this a weighted average, and
$204.8B on its fund's webpage (July 31, 2021).
Since Schwab doesn't say that this figure is weighted, surely that must mean that this average is unweighted? No, it's weighted also, but it's calculated using a "non-standard" formula.
Is Vanguard really the one that is playing fast and loose with figures?

My rough formula for capacity starts with the smallest firm that they would like to include in the portfolio. Currently, that's Rolls Royce. You don't want to own more than 5% of the float or you become a controlling owner, which complicates the manager's life. So 5% of Rolls is $600 million in stock. If you want a concentrated portfolio (and they do), I multiple the maximum size of their smallest firm's holding by the target number of companies in the portfolio. $600M x 30 = $18B.
That's rough because (1) there can be other constraints on the managers in terms of their internal capacity, (2) part of the strategy capacity can be committed to SMAs or other vehicles, and (3) the managers could choose to underweight their smaller companies. I tend not to make the latter assumption with concentrated go-anywhere portfolios because it's equally likely that they would want to overweight the smallest firm.
When we publish a fund's strategy capacity, it's almost always based on a conversation with the adviser who sometimes (Grandeur Peak) has it down to the dollar and other times, they just laugh and exclaim "as if!"
If you're smallest firm is $100B and you're targeting 50 names, this particular match does give you effectively unlimited strategy capacity: $250 billion or so.
For what that's worth,
David

(we know how to define median) ... (Vanguard probably doesn't know how to define median.)
Vanguard knows how to define median and gives its definition right on its website:

median market capitalization

---

An indicator of the size of companies in which a fund invests; the midpoint of market capitalization (market price x shares outstanding) of a fund’s stocks, weighted by the proportion of the fund’s assets invested in each stock. Stocks representing half of the fund’s assets have market capitalizations above the median, and the rest are below it.

https://retirementplans.vanguard.com/VGApp/pe/Glossary?Term=medianmarketcapitalization
Vanguard weights a fund's holdings when calculating its median market cap, just as Vanguard weights a fund's holdings when calculating its mean.
Do we really all know how to define these terms? How about average market cap? For the S&P 500, Fidelity FXAIX reports $539.7B (June 30), M* FXAIX reports $204.8B (July 31), and S&P reports $79.9B (Aug 31). They can't all be right, or can they?
S&P is reporting an unweighted arithmetic mean, Fidelity is reporting a weighted arithmetic mean, and M* is reporting a weighted geometric mean.
S&P 500 fact sheet: navigate to sheet from this page.
Fidelity FXAIX quarterly fund review.
M* portfolio page for FXAIX.
M* definition of average market cap as weighted geometric mean
Getting back to fund median market cap. The Fidelity quarterly report for FXAIX gives both the weighted and unweighted medians: $187.6B and $30.2B respectively. S&P gives "the" median as $32.1B (it's two months more recent than Fidelity's figure). That's a spread not much different from the Vanguard discrepancy.
It's best to be careful when comparing apples and oranges before declaring one of them wrong.

Barrons link: [paywall?]
https://www.barrons.com/amp/articles/will-the-stock-market-climb-or-drop-10-heres-one-trade-to-handle-both-scenarios-51631291769

Like series I savings bonds, series EE savings bonds cannot be redeemed until a year after purchase. Between one and five years, you lose the last three months of interest if you cash out. No penalty after five years.
https://www.treasurydirect.gov/indiv/research/indepth/ebonds/res_e_bonds_eeredeem.htm#when
With EE series savings bonds, there's another implicit penalty. For savings bonds held 20 years, the value of the bond is adjusted to twice its purchase price. Using the rule of 72, that's an annual rate of approximately 72/20 = 3.6%.
But if you cash out earlier, you'll earn just the stated rate on the savings bonds. For newly purchased EE savings bonds, that's a piddly 0.10%. So you "lose" 3.5% in interest annually if you sell before waiting 20 years.
https://www.treasurydirect.gov/indiv/research/indepth/ebonds/res_e_bonds_eeratesandterms_eebondsissued052005andafer.htm#buy

https://investor.vanguard.com/mutual-funds/profile/overview/VDADX/portfolio-holdings
BaluBalu - Sorry, to make a long story short, the median market cap of VDADX is not $169B. It is about $13B. The Vanguard data page is wrong - no surprise.
The reason that M* did not discuss differences between the medians of the two indices is that they are not, in fact, very different, and that (again) the Vanguard data page is wrong,
If you go to the link above, you will see that the mutual fund VDADX holds 247 holdings. Half of 247 is about 123. So if you page forward, 30 stocks at a time, until you see stocks #ing 120 - 150, and take the 123 stock (Whirlpool [WHR] or Hasbro [HAS]; 3rd or 4th from the top, doesn't really matter), you can look up their market caps.
I did look it up. Vanguard (effectively) did not.
https://finance.yahoo.com/quote/WHR/
https://finance.yahoo.com/quote/HAS/
Yahoo links above. According to Yahoo, the market cap of WHR is $13.528B, and HAS is $13.496B. Roughly $13.5B.
According to page 3 of the S&P (we-know-how-to-define-median) factsheet, the median market cap of their index is $13.322B, as of 08-31-21.
So, the VDADX median market cap (at $13.5B) is close enough to the S&P new-index median (at $13.3B). Again, the Vanguard median market cap info is wrong. (Vanguard probably doesn't know how to define median.)
If you don't know the definition for median, you might want to apply for a position at Vanguard, since they won't care if you know or not. If you'd like a definition of median, see below.
https://www.investopedia.com/terms/m/median.asp
PS: Makes you wonder about what else is wrong on the Vanguard page, doesn't it?

It is a large cap growth fund with $5B AUM. It can grow 10 fold before I would worry about capacity constraints. It has had net outflows for each of the past 9 years. If it reaches capacity constraints in the next 10 years means the fund becomes enormously successful, a good problem to have.

Here is the PRWCX portfolio as of 8/31/2021 from the TRP website.
Portfolio
$52.23 billion
Total Net Assets as of 8/31/2021
Asset
Allocation
Domestic Stock
68.90%
Other
28.00%
Domestic Bond
1.40%
Foreign Stock
0.90%
Convertibles
0.80%
Top 10 Holdings 8/31/2021
Microsoft
6.90%
Amazon.com
5.70%
GE
4.43%
Alphabet Class C
3.29%
Danaher
3.24%
Marsh & McLennan
3.16%
PNC Financial Services Group
3.12%
Yum! Brands
3.07%
UnitedHealth Group
3.02%
Thermo Fisher Scientific
2.78%

Some of the discussions on the MFO Discussion Board about tax efficiency of some of the funds that I have written about inspired me to write the following article:
https://seekingalpha.com/article/4454723-best-tax-efficient-funds

Another Nod for Emerging Market from Arnott

From SPGlobal.com -
"The S&P U.S. Dividend Growers Index is designed to measure the performance of U.S. companies that have followed a policy of consistently increasing dividends every year for at least 10 consecutive years. The index excludes the top 25% highest-yielding eligible companies from the index."
The benchmark index used prior to the change to SPGlobal does not appear to have such an exclusion. https://indexes.nasdaqomx.com/docs/Methodology_DVG.pdf
https://indexes.nasdaqomx.com/Index/Overview/DVG
I wondered how the differences in methodologies might effect the composition of the fund as a result of the change. The median market cap appear to go from $169B (Vanguard Portfolio page) to $13B - that is way too drastic change and I wish somebody checks me on this to make sure I have not goofed up. Weight of top 10 components does not change much (goes down from 31.5% to 30.5%) - i.e., well diversified (expect that from Vanguard). Dividend yield does not appear to change much - goes from 1.85% (M* info) to 1.74% - there are probably calc differences to call the 11 basis points a material difference, without digging in further.
VDADX short term and long term total return performances appear not impressive. There seem to be large blend funds from Vanguard that have much better performance and not attracted as much AUM as VDADX ($64B). What is the attraction of VDADX as a large blend fund? Can not possibly be the current dividend yield of 1.75%.

Baird is not a fund company that comes to mind when looking for equity funds. It is replacing the manager for these two funds with (as noted above) an affiliate of Baird (which owns 75%-100%).
Here's what little I can find on Greenhouse - it's indirectly owned by Baird (via ownership by Joseph M and Kirsten T Milano). It does not manage any OEFs, but manages $628M for eight clients including three hedge funds.
https://wallmine.com/adviser/235960/greenhouse-funds-lllp
About seven years ago, Baird floated the idea of a microcap fund managed by Greenhouse. It would own 50-100 companies, compared with 25-50 here.
https://mutualfundobserver.com/discuss/discussion/20043/greenhouse-microcap-discovery-fund-bcdsx
What caught my eye in that prospectus is that Joseph Milano had been manager of T. Rowe Price New America Growth Fund (now All Cap Opportunities Fund) PRWAX for a decade.