Following this thread I had the same issue, running stock 16.04 (xenial) with 
kernel 4.4.0-38.
I have upgraded the kernel to 4.8.10-040810 and the end result is the same but 
symptoms are a bit different:

note: 1GB of RAM, no swap at all

(old kernel)
with 50% of RAM in buffers / cache, kswapd0 took all the CPU it could (~75%). 
iostat was pretty much at 0% utilisation. server ground to a halt immediately 
when free ram expired without ever "eating into" the buffers / cache.

(new kernel)
again, with 50% of RAM in buffers / cache, kswapd0 no longer takes 100% CPU, 
but it still emerges to the top of the list in top as it still manages to take 
more then the other processes. For a difference, now ~75% cpu processes are 
*WA*iting. A second difference is that now, after free ram is consumed, for a 
while buffers / cache are also being reduced in favour of the RAM hungry app. 
However, even this goes only down to about 40 - 43% or RAM being used by 
buffers / cache.

Hopefully this is making at least some sense.

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https://bugs.launchpad.net/bugs/1518457

Title:
  kswapd0 100% CPU usage

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