.The Russell 2000 may possess an earnings problem.Though the small-cap mark got 10.1% in July, it is actually dropped approximately 4% up until now in August, as of Thursday morning.ALPS' Paul Baiocchi records the volatile relocate to the index's overall composition, along with an estimation coming from Beauty Global showing 40% of those companies possess bad profits." [Entrepreneurs] have basically surrendered on their own to the fact that by being in the Russell 2000, I am actually merely visiting need to take the really good along with the negative," the organization's chief ETF planner said to CNBC's "ETF Advantage" this week.To avoid the profitability drag, Baiocchi advises clients focus on top quality firms, considering additional particular exchange-traded funds such as his company's ALPS O'Shares USA Small-Cap Quality Reward ETF Allotments (OUSM)." The suggestion is actually high quality firms that spend and grow their returns, as well as essentially, possess a lot less dryness than their peers," he claimed. "It enables advisors and also financiers who have observed tiny caps go sideways for five years to become assigned to a category that is actually delayed." Aside from its productivity display, the fund consists of merely 107 inventories u00e2 $" a fraction of what is actually inside the Russell 2000. Its own top three holdings are actually Tradeweb Markets, Juniper Networks as well as Old State International, each resting at an about 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 percent factors because time.Disclaimer.