.The Russell 2000 might possess a profitability problem.Though the small-cap index obtained 10.1% in July, it’s lost around 4% thus far in August, as of Thursday morning.ALPS’ Paul Baiocchi chalks up the inconsistent moves to the mark’s overall composition, with an estimate from Beauty Global presenting 40% of those firms have bad earnings.” [Real estate investors] have essentially resigned on their own to the reality that through residing in the Russell 2000, I’m merely going to need to take the excellent with the negative,” the firm’s principal ETF schemer said to CNBC’s “ETF Advantage” this week.To stay away from the earnings nuisance, Baiocchi advises entrepreneurs focus on premium companies, examining additional particular exchange-traded funds like his agency’s mountain range O’Shares USA Small-Cap Top Quality Reward ETF Shares (OUSM).” The concept is quality firms that pay for and also develop their returns, as well as notably, have less volatility than their peers,” he claimed. “It allows consultants and investors that have viewed tiny hats go laterally for 5 years to be assigned to a classification that’s delayed.” In addition to its own profits screen, the fund includes just 107 stocks u00e2 $” a portion of what’s inside the Russell 2000. Its best 3 holdings are Tradeweb Markets, Juniper Networks and also Old Commonwealth International, each sitting at an approximately 2% weighting in the fund, per FactSet.Shares of the small-cap fund are actually down 1.5% month to date u00e2 $” exceeding the Russell by much more than 2 portion factors in that time.Disclaimer.