.The Russell 2000 might possess a profits problem.Though the small-cap index acquired 10.1% in July, it's lost roughly 4% thus far in August, as of Thursday morning.ALPS' Paul Baiocchi records the inconsistent relocate to the index's general composition, with a price quote from Apollo Global showing 40% of those providers possess bad incomes." [Financiers] have basically surrendered themselves to the simple fact that through being in the Russell 2000, I am actually merely mosting likely to have to take the excellent along with the negative," the agency's principal ETF schemer told CNBC's "ETF Advantage" this week.To stay clear of the earnings bother, Baiocchi proposes clients prioritize top quality companies, looking at even more discerning exchange-traded funds including his agency's ALPS O'Shares USA Small-Cap Top Quality Returns ETF Shares (OUSM)." The idea is quality business that pay for and increase their dividends, and notably, have less volatility than their peers," he mentioned. "It enables advisors and also entrepreneurs who have observed little caps go sideways for 5 years to be alloted to a classification that is actually lagged." Aside from its own profitability screen, the fund includes merely 107 stocks u00e2 $" a portion of what's inside the Russell 2000. Its leading three holdings are actually Tradeweb Markets, Juniper Networks as well as Old State International, each resting at an around 2% weighting in the fund, every FactSet.Shares of the small-cap fund are down 1.5% month to day u00e2 $" outperforming the Russell through greater than 2 percentage factors because time.Disclaimer.