.The Russell 2000 might possess a profits problem.Though the small-cap mark acquired 10.1% in July, it's fallen roughly 4% so far in August, as of Thursday morning.ALPS' Paul Baiocchi chalks up the inconsistent relocate to the mark's overall composition, with an estimate from Beauty Global revealing 40% of those providers possess bad incomes." [Financiers] have primarily surrendered themselves to the fact that by remaining in the Russell 2000, I'm merely mosting likely to must take the excellent along with the negative," the agency's main ETF schemer informed CNBC's "ETF Edge" this week.To stay clear of the earnings nuisance, Baiocchi recommends clients prioritize top quality business, looking at more particular exchange-traded funds including his organization's mountain range O'Shares USA Small-Cap Top Quality Returns ETF Shares (OUSM)." The tip is actually top quality companies that pay out and also increase their dividends, as well as importantly, have much less volatility than their peers," he mentioned. "It makes it possible for consultants and also capitalists that have found little caps go laterally for five years to become designated to a category that is actually delayed." Along with its profits display, the fund consists of merely 107 supplies u00e2 $" a fraction of what is actually inside the Russell 2000. Its leading three holdings are actually Tradeweb Markets, Juniper Networks and Old Republic International, each sitting at an about 2% weighting in the fund, every FactSet.Shares of the small-cap fund are actually down 1.5% month to date u00e2 $" outmatching the Russell by much more than 2 amount points during that time.Disclaimer.