I have an emergency fund, but I don't count it as part of my asset allocation. In my opinion, only invested assets count toward FI cash flow, so although the emergency fund is part of my net worth, I don't include it when calculating how much my stache is technically affording me each month.
I can understand when people don't have an emergency fund when they have huge amounts of assets, but I've always liked having it around. I'm also saving up to take a year off work, and all of that money is currently in cash.
As for the emergency fund itself, it doesn't bother me too much that it isn't growing. I'm swimming in so much money compared to the average person, I just don't think it's worth complaining about a relatively small chunk not being part of the GAINS or whatever. But that's just me. I'm not much of an optimizer when it comes to these things. I even treat my HSA as an account for health stuff (gasp!)
EDIT: For what it's worth, my investments are 90/10 in stocks/bonds. I kind of think of cash as really crappy bonds. The goal isn't so much to see growth as it is to act as a buffer against the gyrations of the market. By isolating some money from wild swings, it helps me care less about the present state of the economy. It does erode with inflation, but I've just stopped caring too much about these things. It works for me.