Foliage Tool Clustering

According to the wiki about the foliage tool the engine clusters foliage instance into groups automatically. To my understanding culling of the instances should then work perfectly with small groups of the same foliage instance vanishing in the distance. However I noticed that setting up culling for an instance makes ALL of the instances vanish as soon as the max cull distance was reached. Is there a setting I’m missing to setup the scale at which the engine automatically clusters the foliage instances or is it currently broken?
I’m trying to set up my foliage so it fades out with the shader function but because the culling doesn’t really work I might as well leave it and don’t even consider culling itself since it’s useless because of that. However all of that leaves big performance issues.
Does someone know something?

Have you tried turning on “Dithered LoD transition” on foliage material? It looks like the same issue covered here: LoD foliage - World Creation - Unreal Engine Forums