.The Russell 2000 might possess a profitability problem.Though the small-cap index got 10.1% in July, it is actually fallen approximately 4% up until now in August, as of Thursday morning.ALPS' Paul Baiocchi earns the volatile moves to the index's overall composition, along with a quote coming from Apollo Global presenting 40% of those companies have unfavorable profits." [Real estate investors] have generally surrendered themselves to the fact that through being in the Russell 2000, I am actually simply mosting likely to must take the really good with the poor," the organization's chief ETF planner informed CNBC's "ETF Upper hand" this week.To steer clear of the earnings bother, Baiocchi recommends financiers focus on premium providers, taking a look at more selective exchange-traded funds such as his company's O'Shares united state Small-Cap Quality Reward ETF Allotments (OUSM)." The suggestion is actually high quality firms that pay out and also increase their dividends, as well as importantly, have less dryness than their peers," he stated. "It permits consultants and investors that have actually viewed tiny limits go sidewards for 5 years to be allocated to a type that's dragged." Along with its own earnings monitor, the fund consists of simply 107 stocks u00e2 $" a fraction of what is actually inside the Russell 2000. Its own best 3 holdings are actually Tradeweb Markets, Juniper Networks and also Old Republic International, each resting at an approximately 2% weighting in the fund, per FactSet.Shares of the small-cap fund are down 1.5% month to time u00e2 $" outperforming the Russell by much more than 2 amount factors during that time.Disclaimer.