BlackRock Inc. on Tuesday will announce it is slashing fees on seven of its exchange-traded funds, making one iShares product cheaper than a competing offering from low-cost rival Vanguard Group.

With the drop in annual expenses - from 0.07 percent of assets to 0.03 percent for the iShares Core S&P Total U.S. Stock Market ETF - the sticker price of that $2.8 billion fund will fall below that of the Vanguard Total Stock Market ETF, which is responsible for $58 billion in assets. The Vanguard fund carries a 0.05 percent expense ratio.

While those fees may seem small, they equate to millions in revenue for asset managers and potentially increased performance for investors. The reduction could cut an estimated $1 million of management fees BlackRock collects on the product each year, a 57 percent reduction, unless assets in the fund grow.

"Our goal is to be present in the core of investors' portfolios," said Ruth Weiss, head of the U.S. iShares product team, in an interview. "We know that price is an important factor in the decision."

Three U.S. brands - BlackRock, Vanguard and State Street - control 88 percent of the ETF market's assets. They continue to trim prices strategically.

Overall, the expenses attached to ETFs have dropped for each of the last three years, to 0.51 percent for the average stock ETF in 2014, according to Lipper. Vanguard, in particular, is known for its evangelism for lower-cost investment products. It has expanded its ETF market share dramatically over the past several years.

Management fees are just one cost of investing in ETFs. But fees charged by fund managers are often the largest component of expenses for long-term investors and the easiest for them to control.

New York-based BlackRock is also giving the Core S&P Total U.S. Stock Market ETF a new benchmark index that includes more small companies. Expenses on six other so-called core iShares ETFs will be cut. The funds are aimed at buy-and-hold retail investors.

BlackRock is also introducing a new fund for those investors, called the iShares Core International Aggregate Bond ETF, which holds international bonds and attempts to tamp down the effect of foreign currency swings on those bonds' returns.