I haven't used this yarn, but I've had the same kind of trouble with other singly ply yarns (most recently and notably with Cascade Eco Duo). It seems to fluff up on its own, but I think part of the reason is that I'm a little heavy-handed for it. I've also wondered if body heat and sweat from overly-warm hands might have an impact. But I have nothing scientific to support that speculation.
My only suggestion is to watch how it twists as you're knitting it (which is easier with a heavier yarn, I admit). If it's coming untwisted, that could explain part of your problem.