.The Russell 2000 may possess a profits problem.Though the small-cap index got 10.1% in July, it is actually fallen roughly 4% so far in August, since Thursday morning.ALPS' Paul Baiocchi earns the unstable relocate to the index's overall composition, with a price quote coming from Apollo Global presenting 40% of those providers have bad earnings." [Clients] have generally surrendered themselves to the reality that by being in the Russell 2000, I am actually just visiting need to take the really good along with the bad," the agency's principal ETF strategist told CNBC's "ETF Advantage" this week.To stay clear of the earnings burden, Baiocchi recommends real estate investors focus on quality companies, taking a look at even more selective exchange-traded funds including his agency's mountain range O'Shares united state Small-Cap High Quality Reward ETF Portions (OUSM)." The concept is actually premium providers that pay for and also grow their rewards, and notably, have less volatility than their peers," he claimed. "It allows advisors as well as investors who have actually observed little caps go sideways for 5 years to be alloted to a group that's dragged." In addition to its productivity display, the fund consists of just 107 stocks u00e2 $" a fraction of what is actually inside the Russell 2000. Its own best 3 holdings are Tradeweb Markets, Juniper Networks and Old Republic International, each resting at a roughly 2% weighting in the fund, per FactSet.Shares of the small-cap fund are down 1.5% month to day u00e2 $" outperforming the Russell by much more than 2 percent aspects because time.Disclaimer.