.The Russell 2000 might possess an earnings problem.Though the small-cap index obtained 10.1% in July, it's lost roughly 4% thus far in August, since Thursday morning.ALPS' Paul Baiocchi chalks up the volatile transfer to the index's total composition, with an estimation from Apollo Global revealing 40% of those companies possess bad incomes." [Capitalists] have actually generally resigned themselves to the fact that through residing in the Russell 2000, I am actually just going to must take the good with the negative," the organization's chief ETF strategist informed CNBC's "ETF Edge" this week.To avoid the productivity bother, Baiocchi advises entrepreneurs prioritize quality providers, examining even more careful exchange-traded funds like his company's ALPS O'Shares U.S. Small-Cap High Quality Returns ETF Reveals (OUSM)." The tip is quality companies that pay out and also increase their dividends, and also importantly, have less volatility than their peers," he claimed. "It permits consultants as well as capitalists who have seen little limits go laterally for 5 years to become designated to a category that's dragged." Besides its profits screen, the fund contains only 107 sells u00e2 $" a portion of what is actually inside the Russell 2000. Its own top three holdings are Tradeweb Markets, Juniper Networks as well as Old Commonwealth International, each sitting at a roughly 2% weighting in the fund, every FactSet.Shares of the small-cap fund are actually down 1.5% month to day u00e2 $" outshining the Russell by greater than 2 amount points in that time.Disclaimer.