Based on a rigorous vectorial analysis, a fast travelling-wave Mach-Zehnder modulator is modelled and designed. The cross-section of the semiconductor layer stack and the lossy electrodes are carefully modelled using the method of lines in order to investigate propagation characteristics, velocity and losses. This yields an accurate microwave and optical field distribution to explain the behaviour of the component. In order to enhance the modulation efficiency, design curves are derived and the cross-sectional dimensions for minimum microwave loss are determined. The loss of the optimized modulator agrees very well with small-signal measurements up to 40 GHz and HFSS simulations. The layerstack of the fabricated device is suitable for integration with InP multi-wavelength lasers.