Portfolio construction:

I've done a little bit of legwork reviewing the various sector investment options out there.  It does not require much digging to see that the "Spider" products from State Street Global Advisors is the king fo the roost.

Their sector funds are all, except for telecomm, the ones to turn to if you want to invest in sectors rather than individual stocks.  Also, the SPY is the best game in town for S&P 500 big cap equity exposure.  They are cheap (0.18% annual management expense) and extremely liquid.  They are by far the largest in terms of daily volume versus their competitors.

Best sector funds:
XLY    Consumer - cyclical (discretionary)
XLP     Consumer -non cyclical (staples)
XLE    Energy
XLF    Financial
XLV   Health Care
XLI     Industrials
XLB    Materials
XLK    Technology
XLU     Utilities
IYZ       Telecomm  Barclay's iShares product   0.46% expenses

If one does not have the time or inclination to do any stock analysis then, I recommend just using SPY to get equity exposure.  If you want to dabble a bit deeper, then the sector funds are good.  Further still, one would get into stock selection.

A hybrid would be using sector funds to form the core of your holding, and then if you love a stock, then substitute.

For example:

In my portfolio, the weight in consumer staples is 11.6%.  But let's say I loved KMB (I do), so I want to hold a 2% position in that stock. If I do not care too much for picking others, I could hold the remaining 9.6% in XLP shares.  I could further say I hate some other company.  I could then SHORT that stock also and bump UP my holdings of XLP.