The Technology, Media and Telecom sector (or TMT for short) is an industry grouping which comprises the vast majority of companies focusing on new technologies. The TMT sector is sometimes referred to as Technology, Media and Communications (TMC) and there is a substantial overlap between TMT and the 1990s idea of the New Economy.
The technology sector can not hold every firm that depends on innovation because the role of technology has expanded extensively. For example, both Netflix and Meta are in the Communication Services Select Sector spur fund rather than the technology sector. Big tech companies increasingly dominate the TMT sector.
Understanding the TMT sector
The TMT sector includes a wide range of companies that depend on research and development. They focus on patents and other intellectual property and are usually characterised by rapid company growth. As a result, investors in the TMT sector will often tolerate relatively high Price-To-Earnings (P/e) ratios in favour of enterprise-value-to-sales.
Beneficial to growth investors looking for potential returns that will dramatically outperform the market, the TMT sector enables new technologies to continually develop. Some companies may eventually become big names in the sector and by securing involvement early, growth investors hope to achieve higher returns.