.The Russell 2000 might possess a profitability problem.Though the small-cap index gained 10.1% in July, it is actually fallen approximately 4% until now in August, since Thursday morning.ALPS' Paul Baiocchi chalks up the unpredictable moves to the index's general composition, along with an estimation coming from Beauty Global presenting 40% of those companies possess unfavorable incomes." [Investors] have actually basically surrendered on their own to the simple fact that through remaining in the Russell 2000, I am actually just visiting must take the good along with the negative," the firm's main ETF planner told CNBC's "ETF Upper hand" this week.To stay clear of the productivity nuisance, Baiocchi advises capitalists focus on top quality business, considering even more careful exchange-traded funds including his organization's mountain range O'Shares USA Small-Cap Premium Returns ETF Allotments (OUSM)." The tip is actually quality firms that pay and also increase their dividends, and notably, possess much less dryness than their peers," he claimed. "It allows advisors as well as investors that have actually seen little limits go sidewards for 5 years to be assigned to a group that's lagged." Aside from its own earnings screen, the fund contains simply 107 stocks u00e2 $" a portion of what's inside the Russell 2000. Its best three holdings are Tradeweb Markets, Juniper Networks and also Old Commonwealth International, each sitting at an approximately 2% weighting in the fund, every FactSet.Shares of the small-cap fund are down 1.5% month to date u00e2 $" outmatching the Russell through much more than 2 percentage aspects in that time.Disclaimer.