Mock Up Games
Morph targets with cloth has been disabled by design for the foreseeable future, don’t expect this to get addressed within the next year (or maybe even ever).
As a result of the new cloth pipeline you can collide with many more collision capsules (which are now the capsules in your physics asset, rather being separate) so now we can have many more shapes to collide with - so there is a possibility of having a more detailed shape, it might be possible to implement different sizes of physics asset to represent different body sizes.
I feel (but I am not sure) that the cloth has now been implemented at an earlier stage in the pipeline (for efficiency) so the engine now does morph OR cloth. It simply can’t do both.
Regarding material groups. Not 100% sure but I think whats being talked about here is the fact you can have 1 asset with multiple materials, some materials can have morphs, others can have clothing applied. So morphs and cloth on the same asset - but not on the same material.
I hope that helps.
Wjones