What is the difference between doing distressed investing at an Apollo / Centerbridge vs at a hedge fund like Monarch / Anchorage / York given that top Rx groups send the same caliber analysts to either? And why do top Rx analysts tend to exit to funds like these over a fund like, say, GSO or Ares or Cerberus, which are obviously great funds that are just as active in distressed?
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I'll take a shot.
First, there's a bit of difference between Apollo / Centerbridge. Most of the top kids going to Apollo are going to do PE (not distressed specifically), while Centerbridge is more split (they generally ask which you prefer from what I understand). For the question you're asking, Apollo doesn't really fit the mold. It's almost akin to asking why BX PE instead of Monarch.
Second, Centerbridge is a safer option than a "traditional" hedge fund. It's bigger and has a lot of locked-up capital (idk if they have an evergreen fund as well, someone more knowledgeable can fill in specifics on CB's access to capital for each strategy). It's a highly prestigious, high-paying, safe job, which is all a lot of people are looking for early on in their career. On top of that, CB does a tremendous at interviewing very early in the process, and generally takes on a lot of associates. If you've just spent 12 hours stuck in their office on the fist day of the on-cycle process, and then you get an offer, and are surrounded by people from the firm selling you on all its amazing aspects, then it's very difficult to turn down.
Third, in contrast to the above, HFs are obviously much riskier (of the firms you listed, York distressed is basically dead and Anchorage has had a brutal few years), hire far fewer people (Monarch hasn't hired on-cycle in years, Anchorage takes ~1-2), and aren't interviewing right as the process kids off (given hiring needs it doesn't make sense to rush the process and get someone you don't want. A bad hire hurts a lot more when you run more lean). However, the HFs have the benefit of better hours (generally speaking), more focus on actual investing (more hierarchical PE firms create more admin work for younger members), and potentially better pay (varies a lot).
On the GSO, Ares, Cerberus point, I think it varies for each firm.
GSO is a tremendous platform, but it's low paying for junior members and the firm is spread very thin across situations because of its size. GSO has made some tremendous investments over the years, and is very good overall, but in a number of situations where I've been involved with them they simply aren't as sharp as some of other players involved.
Ares is hurt by its west coast location, and from my experience is a little better at direct lending and broadly that style of credit investing than traditional distressed. They're best-in class at Direct Lending though.
Cerberus I know the least about. I wouldn't have viewed them as comparable to the other funds we've discussed, but I'm simply not knowledgeable about them.