.The Russell 2000 may have an earnings problem.Though the small-cap index gained 10.1% in July, it is actually fallen approximately 4% thus far in August, since Thursday morning.ALPS' Paul Baiocchi chalks up the volatile transfer to the index's general arrangement, along with an estimation from Apollo Global presenting 40% of those companies possess damaging earnings." [Capitalists] have basically resigned on their own to the reality that through residing in the Russell 2000, I'm simply going to must take the great with the negative," the organization's chief ETF strategist informed CNBC's "ETF Upper hand" this week.To steer clear of the profits burden, Baiocchi suggests investors focus on premium business, examining more particular exchange-traded funds such as his organization's mountain range O'Shares united state Small-Cap Quality Returns ETF Shares (OUSM)." The concept is quality companies that pay for as well as grow their returns, and importantly, have less volatility than their peers," he mentioned. "It allows experts and also financiers who have actually observed small hats go sideways for 5 years to be allocated to a group that is actually delayed." Besides its profits display screen, the fund consists of just 107 supplies u00e2 $" a fraction of what is actually inside the Russell 2000. Its own leading three holdings are Tradeweb Markets, Juniper Networks as well as Old State International, each sitting at an approximately 2% weighting in the fund, per FactSet.Shares of the small-cap fund are actually down 1.5% month to time u00e2 $" outshining the Russell through greater than 2 percentage points in that time.Disclaimer.