.The Russell 2000 may have a profits problem.Though the small-cap mark obtained 10.1% in July, it's dropped around 4% up until now in August, since Thursday morning.ALPS' Paul Baiocchi chalks up the inconsistent relocate to the mark's general arrangement, along with a price quote from Beauty Global showing 40% of those providers have adverse earnings." [Investors] have primarily surrendered on their own to the truth that through remaining in the Russell 2000, I'm just mosting likely to need to take the great along with the negative," the company's main ETF schemer said to CNBC's "ETF Upper hand" this week.To steer clear of the earnings drag, Baiocchi suggests financiers prioritize top quality firms, checking out more careful exchange-traded funds including his firm's O'Shares united state Small-Cap Top Quality Reward ETF Portions (OUSM)." The concept is premium providers that pay out and develop their dividends, and also significantly, possess less volatility than their peers," he claimed. "It enables consultants and financiers that have seen small caps go sideways for 5 years to become designated to a classification that's dragged." Besides its own profitability monitor, the fund includes just 107 inventories u00e2 $" a portion of what is actually inside the Russell 2000. Its own top 3 holdings are Tradeweb Markets, Juniper Networks and also Old State International, each resting at an about 2% weighting in the fund, every FactSet.Shares of the small-cap fund are down 1.5% month to day u00e2 $" outperforming the Russell by greater than 2 portion factors during that time.Disclaimer.