.The Russell 2000 might possess a profitability problem.Though the small-cap index got 10.1% in July, it is actually lost around 4% up until now in August, since Thursday morning.ALPS' Paul Baiocchi achieves the volatile transfer to the index's overall arrangement, along with an estimate from Beauty Global showing 40% of those business have bad earnings." [Capitalists] have actually basically surrendered themselves to the truth that through residing in the Russell 2000, I am actually just mosting likely to must take the excellent with the negative," the company's chief ETF strategist said to CNBC's "ETF Upper hand" this week.To stay clear of the earnings burden, Baiocchi suggests clients focus on premium business, considering more selective exchange-traded funds such as his agency's mountain range O'Shares U.S. Small-Cap High Quality Dividend ETF Portions (OUSM)." The tip is high quality companies that pay out and also expand their returns, as well as notably, have less dryness than their peers," he pointed out. "It allows specialists and entrepreneurs that have actually observed small caps go sideways for 5 years to become alloted to a type that is actually delayed." Besides its own profits display screen, the fund contains simply 107 stocks u00e2 $" a fraction of what is actually inside the Russell 2000. Its own leading 3 holdings are Tradeweb Markets, Juniper Networks and also Old State International, each sitting at a roughly 2% weighting in the fund, every FactSet.Shares of the small-cap fund are actually down 1.5% month to time u00e2 $" outshining the Russell by greater than 2 amount points because time.Disclaimer.