.The Russell 2000 might have a profits problem.Though the small-cap index gained 10.1% in July, it's fallen roughly 4% up until now in August, since Thursday morning.ALPS' Paul Baiocchi earns the volatile transfer to the mark's total composition, with an estimation coming from Apollo Global showing 40% of those companies possess negative profits." [Clients] have actually essentially resigned on their own to the simple fact that through remaining in the Russell 2000, I am actually only heading to need to take the really good with the bad," the organization's chief ETF schemer informed CNBC's "ETF Edge" this week.To prevent the profits drag, Baiocchi advises investors prioritize quality firms, looking at more careful exchange-traded funds like his organization's O'Shares USA Small-Cap Quality Dividend ETF Allotments (OUSM)." The idea is actually top quality business that pay for as well as increase their returns, and notably, possess less dryness than their peers," he said. "It makes it possible for experts and also entrepreneurs who have seen little caps go sidewards for five years to become assigned to a type that is actually lagged." Besides its own profitability display, the fund includes simply 107 supplies u00e2 $" a portion of what's inside the Russell 2000. Its top three holdings are actually Tradeweb Markets, Juniper Networks as well as Old State International, each resting at an approximately 2% weighting in the fund, every FactSet.Shares of the small-cap fund are down 1.5% month to day u00e2 $" surpassing the Russell by greater than 2 amount points because time.Disclaimer.