.The Russell 2000 may possess a profitability problem.Though the small-cap mark acquired 10.1% in July, it is actually lost about 4% thus far in August, as of Thursday morning.ALPS' Paul Baiocchi achieves the inconsistent transfer to the index's total composition, with a quote from Apollo Global revealing 40% of those business possess negative incomes." [Real estate investors] have actually essentially resigned themselves to the reality that through remaining in the Russell 2000, I am actually simply mosting likely to must take the excellent with the bad," the company's chief ETF planner told CNBC's "ETF Edge" this week.To stay away from the earnings burden, Baiocchi suggests clients focus on high quality business, considering more careful exchange-traded funds such as his organization's mountain range O'Shares U.S. Small-Cap Top Quality Reward ETF Shares (OUSM)." The idea is high quality companies that pay as well as expand their returns, and importantly, possess much less volatility than their peers," he mentioned. "It allows experts as well as investors that have viewed little caps go sideways for five years to be alloted to a type that is actually delayed." Aside from its profitability display screen, the fund contains only 107 supplies u00e2 $" a fraction of what's inside the Russell 2000. Its own leading three holdings are Tradeweb Markets, Juniper Networks and also Old Commonwealth International, each resting at an around 2% weighting in the fund, per FactSet.Shares of the small-cap fund are actually down 1.5% month to time u00e2 $" outruning the Russell through greater than 2 percent factors because time.Disclaimer.