.The Russell 2000 might have a profitability problem.Though the small-cap index gained 10.1% in July, it's lost approximately 4% up until now in August, since Thursday morning.ALPS' Paul Baiocchi records the unstable moves to the index's overall composition, along with an estimate from Apollo Global showing 40% of those companies possess bad incomes." [Capitalists] have actually generally surrendered on their own to the fact that through residing in the Russell 2000, I am actually only visiting have to take the great along with the bad," the firm's main ETF schemer told CNBC's "ETF Edge" this week.To stay clear of the earnings bother, Baiocchi proposes entrepreneurs focus on top quality companies, looking at additional careful exchange-traded funds such as his agency's ALPS O'Shares U.S. Small-Cap Quality Reward ETF Reveals (OUSM)." The concept is actually quality business that pay and grow their returns, as well as importantly, possess less volatility than their peers," he said. "It allows consultants and clients who have actually found tiny caps go sidewards for five years to become allocated to a category that's dragged." In addition to its own profitability screen, the fund contains simply 107 inventories u00e2 $" a portion of what is actually inside the Russell 2000. Its top 3 holdings are Tradeweb Markets, Juniper Networks and Old Republic International, each resting at an approximately 2% weighting in the fund, per FactSet.Shares of the small-cap fund are actually down 1.5% month to date u00e2 $" outmatching the Russell by greater than 2 percent factors in that time.Disclaimer.