I made an instancer asset in Houdini - a few rows of randomly oriented points with (180 degree step). I put this asset in UE and assigned stone blocks (with 3 LODs). In UE when raytracing is ON I faced with strange behavior of stone block assets - look at attachment please. My guess - instance assets somehow inherit normals direction from points and breaking their own normals, binormal and tangents.
Also it is somehow depends from LOD switching. And independent from material - even with simple material problem still exist.