Ok, I found a pretty nifty way to overcome this
instad of using static mesh foliage, I tried it on actor foliage and it worked with ray-tracing
Use actor foliage instead of static mesh foliage:
1.Make a new blueprint class that inherits from static mesh actor
2.Turn evaluate world position offset on in the static mesh component, set the mesh to your desired mesh
3.Create an Actor Foliage class that uses your new class as its base class
4.Use the actor foliage with the foliage tool
Just leaving this here in case someone stumble across the same issue as me
*courtesy of Arkiras: