.The Russell 2000 may have a profits problem.Though the small-cap index acquired 10.1% in July, it is actually dropped approximately 4% so far in August, as of Thursday morning.ALPS' Paul Baiocchi chalks up the unpredictable relocate to the index's total arrangement, with a quote coming from Beauty Global presenting 40% of those business have unfavorable earnings." [Entrepreneurs] have actually primarily surrendered themselves to the fact that by being in the Russell 2000, I am actually merely heading to have to take the excellent along with the negative," the company's chief ETF schemer told CNBC's "ETF Advantage" this week.To avoid the productivity drag, Baiocchi proposes entrepreneurs focus on quality providers, taking a look at additional discerning exchange-traded funds including his company's mountain range O'Shares united state Small-Cap Top Quality Reward ETF Allotments (OUSM)." The suggestion is actually top quality companies that spend as well as increase their dividends, and significantly, possess much less volatility than their peers," he stated. "It allows consultants and also entrepreneurs who have actually found small hats go sideways for 5 years to be designated to a type that is actually delayed." In addition to its own profitability display, the fund contains only 107 inventories u00e2 $" a portion of what is actually inside the Russell 2000. Its best three holdings are Tradeweb Markets, Juniper Networks as well as Old State 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 day u00e2 $" outruning the Russell by more than 2 amount points during that time.Disclaimer.