.The Russell 2000 may have a profits problem.Though the small-cap index gained 10.1% in July, it is actually dropped roughly 4% until now in August, as of Thursday morning.ALPS' Paul Baiocchi chalks up the unstable transfer to the index's general composition, with an estimate coming from Apollo Global presenting 40% of those providers have bad revenues." [Entrepreneurs] have actually basically resigned on their own to the truth that by residing in the Russell 2000, I'm only heading to have to take the great with the bad," the firm's chief ETF planner informed CNBC's "ETF Advantage" this week.To steer clear of the earnings bother, Baiocchi advises entrepreneurs focus on high quality business, looking at additional selective exchange-traded funds like his agency's ALPS O'Shares united state Small-Cap Top Quality Returns ETF Allotments (OUSM)." The idea is actually premium business that pay out and expand their rewards, as well as significantly, have a lot less volatility than their peers," he said. "It enables specialists as well as clients that have observed tiny limits go laterally for five years to be designated to a category that is actually lagged." Aside from its success display, the fund includes 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 sitting at an around 2% weighting in the fund, every FactSet.Shares of the small-cap fund are actually down 1.5% month to day u00e2 $" surpassing the Russell by greater than 2 percentage factors during that time.Disclaimer.