.The Russell 2000 may possess a profits problem.Though the small-cap mark got 10.1% in July, it is actually lost around 4% up until now in August, since Thursday morning.ALPS' Paul Baiocchi achieves the unpredictable relocate to the index's general composition, along with an estimation coming from Apollo Global revealing 40% of those companies have negative earnings." [Investors] have actually essentially resigned on their own to the simple fact that through remaining in the Russell 2000, I am actually merely heading to have to take the excellent with the poor," the agency's main ETF strategist informed CNBC's "ETF Edge" this week.To avoid the success burden, Baiocchi recommends financiers focus on high quality companies, taking a look at even more discerning exchange-traded funds such as his company's O'Shares U.S. Small-Cap Top Quality Reward ETF Allotments (OUSM)." The idea is actually high quality providers that spend and increase their rewards, and also importantly, possess a lot less volatility than their peers," he mentioned. "It permits specialists and also capitalists that have actually found small caps go sideways for 5 years to be alloted to a classification that's dragged." Besides its own productivity screen, the fund has merely 107 supplies u00e2 $" a portion of what's inside the Russell 2000. Its leading 3 holdings are actually Tradeweb Markets, Juniper Networks and also Old Republic International, each sitting at an about 2% weighting in the fund, every FactSet.Shares of the small-cap fund are down 1.5% month to date u00e2 $" outperforming the Russell through more than 2 amount factors during that time.Disclaimer.