.The Russell 2000 may have a profits problem.Though the small-cap index gained 10.1% in July, it's fallen roughly 4% until now in August, since Thursday morning.ALPS' Paul Baiocchi earns the unpredictable moves to the index's total composition, along with a price quote coming from Beauty Global showing 40% of those companies have adverse incomes." [Entrepreneurs] have actually primarily surrendered on their own to the reality that by residing in the Russell 2000, I'm just mosting likely to must take the excellent along with the bad," the organization's main ETF schemer told CNBC's "ETF Advantage" this week.To stay away from the earnings drag, Baiocchi advises financiers focus on top quality business, taking a look at more discerning exchange-traded funds like his firm's O'Shares U.S. Small-Cap Quality Reward ETF Portions (OUSM)." The tip is actually quality business that pay for and develop their dividends, and also notably, have a lot less dryness than their peers," he stated. "It allows experts as well as real estate investors that have actually observed tiny limits go laterally for five years to become allocated to a type that's dragged." In addition to its own earnings monitor, the fund consists of only 107 stocks u00e2 $" a fraction of what is actually inside the Russell 2000. Its own leading 3 holdings are actually Tradeweb Markets, Juniper Networks as well as Old State International, each sitting at an around 2% weighting in the fund, per FactSet.Shares of the small-cap fund are actually down 1.5% month to date u00e2 $" outshining the Russell by greater than 2 percent points during that time.Disclaimer.