Vanguard Group Inc.’s biggest salvo yet in its campaign to cut fees for the investing masses presents industry rivals with a painful choice. Follow suit and lose potentially hundreds of millions in revenue — or hold the line and risk losing badly needed market share.

The Pennsylvania-based fund giant stands to gain ground against rivals such as BlackRock while earning more goodwill from retail investors.

Even if they don’t race to the bottom on price, active managers, in particular, still need to ensure their prices are fair and that they offer something that can’t be replaced with passive.