.The Russell 2000 may have a success problem.Though the small-cap mark acquired 10.1% in July, it's dropped about 4% thus far in August, as of Thursday morning.ALPS' Paul Baiocchi chalks up the unstable transfer to the index's total arrangement, with a price quote from Beauty Global showing 40% of those business possess adverse incomes." [Financiers] have actually primarily surrendered themselves to the fact that by residing in the Russell 2000, I am actually merely going to need to take the excellent along with the bad," the firm's main ETF planner told CNBC's "ETF Upper hand" this week.To stay clear of the earnings drag, Baiocchi proposes clients focus on top quality firms, taking a look at more discerning exchange-traded funds such as his company's mountain range O'Shares USA Small-Cap High Quality Dividend ETF Portions (OUSM)." The tip is actually high quality companies that pay for as well as increase their dividends, as well as notably, possess less volatility than their peers," he claimed. "It enables consultants and also capitalists who have observed little caps go laterally for five years to be designated to a group that is actually delayed." Aside from its own profits monitor, the fund includes only 107 stocks u00e2 $" a fraction of what's inside the Russell 2000. Its own best three holdings are actually Tradeweb Markets, Juniper Networks as well as Old State International, each resting at an about 2% weighting in the fund, every FactSet.Shares of the small-cap fund are actually down 1.5% month to time u00e2 $" outshining the Russell by much more than 2 percent points in that time.Disclaimer.