In 2025, the use of small caps is expected to increase in popularity, according to VettaFi's research head.

The small-cap stock market experienced its first historic week in three years, and one exchange-traded fund expert predicts that the group's record highs will help attract investors back to the market.

"Todd Rosenbluth of VettaFi stated on CNBC's "ETF Edge" that small caps will become increasingly popular in 2025. He explained that their popularity has been increasing since the election, and this trend is expected to continue as interest rates continue to decline."

ETF funds specializing in small caps are expected to benefit from investors seeking to diversify their market exposure, according to Rosenbluth, the firm's head of research.

The small-cap stock tracking index reached its first record high since November 2021 this week and recorded its best monthly performance since last December. The index has increased by almost 11% in November and 35% over the past 52 weeks as of Friday's close.

Rosenbluth recommends taking profits in the "Magnificent Seven" stocks, which consist of , , , , , and , and suggests that small caps will benefit. Additionally, he anticipates investors will shift away from money market accounts as a result of the Federal Reserve's interest rate easing policy.

"We expect some more dispersion in the winners," Rosenbluth said.

Rosenbluth identified the Core S&P Small-Cap ETF and the VictoryShares Small Cap Free Cash Flow ETF as potential ways to capitalize on the strength in small caps. In November, the Core S&P Small-Cap ETF experienced a 11% increase, while the VictoryShares' fund saw almost an 8% rise.