.The Russell 2000 might have a profitability problem.Though the small-cap index obtained 10.1% in July, it is actually gone down around 4% so far in August, as of Thursday morning.ALPS' Paul Baiocchi chalks up the volatile relocate to the index's total arrangement, with a price quote from Apollo Global showing 40% of those companies possess adverse revenues." [Financiers] have generally resigned on their own to the simple fact that through residing in the Russell 2000, I am actually merely going to need to take the good along with the bad," the company's principal ETF strategist said to CNBC's "ETF Upper hand" this week.To steer clear of the productivity drag, Baiocchi advises financiers focus on premium firms, examining additional discerning exchange-traded funds such as his company's ALPS O'Shares U.S. Small-Cap High Quality Returns ETF Allotments (OUSM)." The idea is quality providers that spend and expand their dividends, and also essentially, possess much less volatility than their peers," he mentioned. "It permits consultants and also financiers who have actually found tiny limits go sidewards for 5 years to become designated to a group that is actually delayed." In addition to its own productivity screen, the fund consists of simply 107 supplies u00e2 $" a portion of what is actually inside the Russell 2000. Its own top 3 holdings are Tradeweb Markets, Juniper Networks as well as Old Republic 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 time u00e2 $" surpassing the Russell through much more than 2 percent points in that time.Disclaimer.