USD and MaterialX currently work in unreal with a .mtlx file referenced into a USD stage. For many other DCCs like Houdini and Maya it is preferable instead have USD-encoded MaterialX files (.usd rather than .usd + .mtlx).
To my knowledge that is not possible to read into Unreal currently. Please correct me if that is incorrect.
I’m also curious if there are development plans from Epic to support USD-encoded MaterialX in the future?