re: Best strategy for emergency fund savings?

To an extent.

It is my belief that you only want to be conservative initially. While I would never put all of my emergency fund in a super highly volatile asset or single sector (except MAYBE consumer staples), I see no problem with building towards a high stock exposure.

Why? What about the risk of taking money out in a downturn?

It is only a risk if you take a all of your emergency fund money, invest it at once, and the market goes down.

Remember, your control is a savings account which currently earns almost nothing, so ANYTHING you gain compared to that is lagniappe.

Let's say your emergency fund is in the S&P 500, and it earns 8.0% per year for 5 years. In year six, a massive down turn happens and you lost your job requiring you to pull cash out when the value of the market is down 40% from where it was.

YOU DID NOT LOSE MONEY! In fact, you probably made 5+% compared to having it in a savings account.

So you see, being conservative in an emergency fund is only really relevant in the first couple of years of the transition to it. Especially given the peanuts that savings accounts currently play.