"Aggressive diversification with smaller accounts increases costs and appears to say that Fisher Investments is afraid to be wrong and thus is not willing to make any big bets on any specific individual stocks."

This comment shows a lack of understanding of portfolio management strategies and concepts. The concept of active portfolio management is to beat the stated benchmark over a long term period whether or not the manager can do that for you. When a portfolio is actively managed in this capacity, the manager normally determines over and underweights on sectors and countries represented in the benchmark in order to position the portfolio according to their macroeconomic thoughts. Thus, giving the investor the best probability of beating the benchmark. The fact that you saw some 0.5% positions in your portfolio is because it probably represented sector and country underweights. ALL PORTFOLIO MANAGERS ARE AFRAID TO BE WRONG! When a PM takes an overweight bet, its a common understanding to build a methodology to circumvent the risk. This is to protect you.

It seems the crux of your argument is based on market volatility. Had the subprime situation and resultant credit crunch not dragged down world markets, would you have pulled your money out of FI? I doubt it; even with the higher trading costs associated with their size. A volatile market is not the fault of the manager. In the end, Fisher Investments is an equity manager ONLY. They do not have the capability to create diversified portfolios in any other asset class. So, given positive or negative volatility, they are going to keep your money in the equity markets at all costs because that's how they make money. Your due diligence should have caught that they are an equity only manager and you would have been better served to keep some money in fixed income while hiring Fisher to manage your equity exposure.