.The Russell 2000 may possess a productivity problem.Though the small-cap index obtained 10.1% in July, it's fallen roughly 4% so far in August, as of Thursday morning.ALPS' Paul Baiocchi achieves the unstable transfer to the mark's overall composition, with an estimate from Apollo Global revealing 40% of those companies have adverse profits." [Clients] have actually primarily resigned themselves to the reality that through remaining in the Russell 2000, I'm merely heading to must take the really good along with the poor," the agency's main ETF strategist said to CNBC's "ETF Advantage" this week.To stay away from the profits burden, Baiocchi proposes capitalists focus on quality providers, examining even more discerning exchange-traded funds including his agency's O'Shares USA Small-Cap Quality Reward ETF Allotments (OUSM)." The tip is actually top quality firms that spend and also develop their dividends, and essentially, possess less volatility than their peers," he pointed out. "It enables specialists as well as entrepreneurs that have found tiny caps go laterally for five years to become alloted to a type that is actually lagged." Aside from its profits screen, the fund has just 107 inventories u00e2 $" a portion of what is actually inside the Russell 2000. Its own leading 3 holdings are Tradeweb Markets, Juniper Networks and also Old Republic International, each resting at an around 2% weighting in the fund, per FactSet.Shares of the small-cap fund are down 1.5% month to time u00e2 $" outruning the Russell by much more than 2 percent factors during that time.Disclaimer.