The returns that are not fixed (by contract or contractual arrangements) and have the potential to vary depending on how the investee performs over time. These returns can be positive, negative or both. Control over an investee is mainly manifested in the exposure of an investor to, or its rights in, variable returns that arise from its involvement with the investee, and its ability to affect the returns through that power. Examples of variable returns include dividends and interest, servicing fees, changes in the fair value of an investment, access to future liquidity, economies of scale, cost savings and gaining proprietary knowledge, exposures arising from credit or liquidity support, tax benefits, etc.

In accounting, variability is determined based on the substance (of an arrangement) regardless of its legal form. For instance, the payment on a fixed-interest-bearing instrument (fixed income security) may be not fixed over its lifespan, especially if it is associated with a high credit risk. Likewise, variable returns may also exist in the case of contractually-fixed asset management fees if the investment (or investee) involved is likely to under-perform or cease to perform.