Global asset managers have responded to being undercut by a local exchange traded fund specialist by cutting fees on a pair of Australian equity funds by up to 40 per cent.

Blackrock and Vanguard have capitulated to fee pressure on vanilla Australian equity products in a move designed to shore up flows from investors.

BetaShares MD Alex Vynokur said "One of the key barriers for institutions looking at Australian ETFs was always price." Dominic Lorrimer

Australian ETF specialist Betashares introduced its passive Australian equities product Australia 200 ETF for the rock bottom price of seven basis points of funds under management – or half the price of its nearest rival.

Listed on the ASX under the code A200, the ETF has become one of the fastest growing products of its type and has attracted $584 million in assets under management.

Betashares now has $7.7 billion under management with popular funds such as the Australian High Interest Cash ETF attracting $1 billion of retail investor capital in just four years.