A proposed regulatory exemption could allow Vanguard's Inflation-Protected Securities Fund ( VIPSX) to issue a class of ETF shares. The new fund would represent Vanguard's first actively managed ETF, as well as competition for the highly popular iShares TIPS ETF ( TIP).While economic data has yet to prove that inflation should be a major concern for investors, net flows into inflation-protection funds suggest that the fear is real. Assets in VIPSX have ballooned from $17 billion at the end of 2008 to $27.5 billion today. Assets in TIP have increased from $7.6 billion in October of 2008 to $17.2 billion at the end of October 2009, according to recent data from the National Stock Exchange. (See the October ETF Scorecard). Assets in SPDR Gold Shares ( GLD), used by many investors to hedge against the threat of inflation, grew from $17.6 billion in October 2008 to $36.9 billion at the end of October 2009. (Read How to Invest in Gold ETFs) While gold ETF funds and TIPS ETFs from iShares and Pimco (See Pimco TIPS the Competition) have captivated the attention of investors worried about inflation, the new ETF from Vanguard could provide some serious competition. ETF shares of VIPSX were first proposed in 2007, but later rejected when Vanguard proposed to reveal only a portion of the funds' holdings. Now, promises of full transparency could help to push these ETF shares through the regulatory hoops. Like TIP and the existing Vanguard Inflation-Protection mutual fund, the new ETF shares would invest primarily in Treasury Inflation-Protected Securities. VIPSX, as well as the proposed ETF, would track the Barclays Capital U.S. Treasury Inflation Protected Securities Index. This fund will differ from passively managed ETFs, however, in that the average maturity and mix of bonds may differ from those in the underlying index.