Once you get to time horizons of a few days or more, selling assets from a generic taxable investment account works just fine.
Until it doesn't, because the market crashes. Sure, you can liquidate anyway, but then you're locking in your losses.
The point of an E-fund isn't to get you the best possible gains. It's to be there reliably when the shit hits the fan so you
don't need to tinker with your longer-term investments and potentially mess up your larger plan. The thing is, bad shit tends to be correlated more than anyone realizes. A bad economy triggers layoffs, which triggers a slide in the property market in that area, forcing you to move for a new job right when you can't sell your house. A credit crunch hits across the country, and your HELOC and credit lines get cut in half when you're in the middle of rebuilding the entire back half of your house, even though you still have an 800+ credit score. A market crash sinks both stocks and bonds (so much for the "safety" of bonds, right?). Stagflation means unemployment hits 9% and inflation hits 11%, and mortgage rates spike to 16%.* Etc. etc. etc.
And the best part is that we, as humans, are so tremendously bad at predicting what the next giant walking FUBAR is going to be. All we can say with certainty is that there will be one, but we have no idea how or why. It is sheer hubris to think otherwise.
So, again: the point of an e-fund is to be there for you when you are one of the people on the wrong side of whatever particular FUBAR decides to hit next. It is to protect your downside risk, not maximize your upside gains. High-yield savings or money market is fine; personally, I wouldn't venture beyond that.
*All of these things have happened to me. Some more than once.