.The Russell 2000 might possess a profitability problem.Though the small-cap index got 10.1% in July, it is actually gone down roughly 4% so far in August, since Thursday morning.ALPS' Paul Baiocchi earns the unstable transfer to the mark's overall composition, along with a quote coming from Apollo Global showing 40% of those companies have negative earnings." [Real estate investors] have actually generally resigned themselves to the fact that by residing in the Russell 2000, I am actually just going to need to take the great with the bad," the organization's main ETF planner told CNBC's "ETF Upper hand" this week.To avoid the profitability drag, Baiocchi suggests clients prioritize high quality business, taking a look at more careful exchange-traded funds such as his agency's mountain range O'Shares united state Small-Cap Top Quality Returns ETF Reveals (OUSM)." The tip is actually premium companies that pay for as well as increase their returns, and essentially, have much less dryness than their peers," he claimed. "It makes it possible for specialists as well as capitalists who have seen little hats go laterally for five years to be assigned to a group that's lagged." Along with its profits display screen, the fund includes simply 107 inventories u00e2 $" a portion of what's inside the Russell 2000. Its top 3 holdings are actually Tradeweb Markets, Juniper Networks and Old State International, each resting at an around 2% weighting in the fund, every FactSet.Shares of the small-cap fund are down 1.5% month to day u00e2 $" outruning the Russell through more than 2 amount points in that time.Disclaimer.