.The Russell 2000 might have a success problem.Though the small-cap index obtained 10.1% in July, it's dropped around 4% thus far in August, as of Thursday morning.ALPS' Paul Baiocchi achieves the inconsistent moves to the index's general arrangement, along with a price quote coming from Apollo Global presenting 40% of those firms possess bad profits." [Real estate investors] have generally surrendered themselves to the simple fact that through residing in the Russell 2000, I'm merely mosting likely to must take the really good along with the bad," the organization's principal ETF strategist informed CNBC's "ETF Upper hand" this week.To steer clear of the earnings nuisance, Baiocchi proposes capitalists focus on top quality companies, checking out more selective exchange-traded funds such as his firm's O'Shares USA Small-Cap High Quality Returns ETF Portions (OUSM)." The concept is high quality firms that pay out as well as develop their rewards, and also significantly, possess much less volatility than their peers," he stated. "It allows specialists and investors that have actually seen small caps go sideways for five years to be allocated to a group that's dragged." Besides its own profitability screen, the fund includes just 107 stocks u00e2 $" a portion of what is actually inside the Russell 2000. Its own leading three holdings are actually Tradeweb Markets, Juniper Networks and also Old Republic International, each resting at an around 2% weighting in the fund, every FactSet.Shares of the small-cap fund are actually down 1.5% month to date u00e2 $" outperforming the Russell by greater than 2 percent factors during that time.Disclaimer.