Vanguard will reduce the management fees charged on its flagship Australian shares exchange-traded fund by 30 per cent in response to a series of fee cuts by rivals in the hotly contested market.

The world’s second-largest asset manager on Thursday said it would cut the management fee charged to unitholders of its ASX-listed Vanguard Australian Shares Index ETF to 0.07 per cent a year from 0.10 per cent, effective July 3.