Hi Hyperloop,
This is a known issue and has been requested before. It is also listed under our documentation for Foliage Instanced Meshes as a caveat in our documenation.
Currently the entire cluster of
instances change LODs simultaneously.
We may add support for distance-based
fading per instance in the future.
While this is listed in the foliage section the same is true for instances that are in blueprints as well.
Thank you!
Tim